PRIVATE BUSINESS

London Development Agency Bill (By  Order)

Order for Second Reading read.
	To be read a Second time on 20 March.

Oral Answers to Questions

DEPUTY PRIME MINISTER

The Deputy Prime Minister and First Secretary of State was asked—

Special Advisers

Bob Spink: What the Government's policy is on compensating special advisers who are required to resign.

Barbara Roche: The circumstances in which compensation may be paid to special advisers who resign from the civil service are set out in the "Model Contract for Special Advisers".

Bob Spink: The Prime Minister has the final say in appointing special advisers. Will the Minister tell us exactly what role the Prime Minister plays in dismissing advisers, and will she say what amount of compensation Jo Moore was paid?

Barbara Roche: The hon. Gentleman's question was about special advisers who resign from the civil service. Their conditions are laid down in section 13 of the "Model Contract for Special Advisers". It will be for Jo Moore and the Department to work out the exact terms.

Kevin Brennan: Will my hon. Friend agree to have a look at the evidence given to the Select Committee on Public Administration last week by Sir Richard Mottram about the whole matter of special advisers and how they could be required to resign? Does my hon. Friend agree that it is sometimes not clear whether the Secretary of State or the permanent secretary is responsible for requiring a special adviser to resign? For future reference by Governments of all complexions, would it not be better to clear that up now?

Barbara Roche: We have an obligation to consult on a civil service Act, and of course we shall listen to what people have to say during that consultation. The House should bear in mind, however, the fact that the "Model Contract for Special Advisers" was published for the first time by this Government, and that they also published the code of conduct. That will interest Conservative Members, one in eight of whom I understand to be former special advisers.

Alan Beith: Whose job is it to ensure that special advisers cannot break their code of conduct, and therefore their contracts, with impunity? What action was taken when Ministers confirmed to the House that Jo Moore had instructed a civil servant to brief the press against Bob Kiley, contrary to paragraph 6 of the code? Was that a breach of contract? If not, why not? Would severance pay be payable if it was?

Barbara Roche: The terms and conditions in the model contract go into an individual's terms and conditions of employment. That is the rule in employment law.
	As far as I am aware, no official complaint has been made. If a complaint were made, it would be investigated.

Tim Collins: Will the Minister confirm for the record that it was the Prime Minister who personally decided to retain Jo Moore in office last autumn? If he did, will the Minister confirm that he, not the taxpayer, will be paying any lump sum that is paid to Jo Moore?

Barbara Roche: I refer the hon. Gentleman to what the Prime Minister said on 17 October during Prime Minister's Question Time:
	"First, I do not defend in any shape or form what Jo Moore said, which was horrible, wrong and stupid. I do, however, defend the decision that to sack someone and end their career was too heavy a penalty. That was the decision taken. I supported it and regard the matter as closed."—[Official Report, 17 October 2001; Vol. 372, c. 1165.]
	That is the way in which to deal with these affairs.

Civil Service Bill

Gordon Prentice: If he will publish a civil service Bill in draft.

John Prescott: The Government are committed to the introduction of civil service legislation, and I anticipate working closely with the Select Committee on Public Administration in developing a consensus through all stages of reform. As I said when I appeared before the Committee on 18 October last year, this does not rule out any form of pre-legislative scrutiny.

Gordon Prentice: That is a good answer, but it does not tell me anything that I did not already know. Is there any problem with introducing a civil service Bill, given that all the parties are signed up to it? I am mystified over why there should be so much navel-gazing in regard to an issue on which there is consensus in the House.

John Prescott: As the hon. Gentleman will recall, he asked the same question on an earlier occasion. [Hon. Members: "Hon. Friend!"] Well, I will leave that to the judgment of the House.
	I was trying to make it clear to the House that my hon. Friend—[Hon. Members: "Hear, hear!"]—had asked a question and adjusted it in the process. He asked about pre-legislative scrutiny, which I think is a very good idea.
	People want to have a debate about this issue. We have made it clear that we intend to make a radical change: to put provisions into law and a legislative framework, which the Opposition have called for in their recent report. We think that that is right and we will publish at the right time. The Cabinet Secretary will make a statement about the matter shortly. I believe that he is appearing before my hon. Friend's Committee tomorrow.

Tim Collins: Does the Deputy Prime Minister agree that a civil service Bill should include statutory provision for the ministerial code? Yesterday a judge in the Doncaster case said in passing sentence on two Labour councillors found guilty of corruption—I hope that the Deputy Prime Minister agrees with this—
	"Corruption by those elected by the public strikes at the root of democracy".
	Does he agree that following the Mittal affair, the Hinduja affair, the Ecclestone affair and the Vaz affair, the last person who should be judge and jury on the conduct of Ministers is the Prime Minister?

John Prescott: We could expect a rant from the hon. Gentleman, but a Conservative councillor was before the court at the same time. Let me make it clear that the House condemns corruption wherever it takes place; I assume that that view is held on both sides of the Chamber. All parties have had problems, but the hon. Gentleman seeks only to exploit the situation, and throws doubt on the credibility of many councillors, Tory, Labour and Liberal Democrat, who do an excellent job. We do not intend to put the ministerial code into a legislative framework.

Mr. Speaker: Question 3. [Interruption.]

John Prescott: I was just thinking about Lady Porter.

PIU Reports

David Chaytor: If he will list the performance and innovation unit reports for which his Department is the lead department.

John Prescott: The Cabinet Office is the lead Department for four completed PIU reports, which focused on a cross-cutting approach to government, regional and local government, electronic delivery of Government services, and leadership in the public sector.
	The Minister of State, Cabinet Office is also the sponsor Minister for two current PIU projects, on risk and uncertainty; and ethnic minorities and the labour market.

David Chaytor: The content of all PIU reports is a matter for the sponsoring Minister, so in respect of the process governing the report on the energy review, will my right hon. Friend speak to the Minister for Industry and Energy and ensure that there is the fullest possible debate about that review over the next few months, given the deteriorating international situation, particularly in the middle east?

John Prescott: The report was commissioned by the Prime Minister, as my hon. Friend is aware. It was conducted by the PIU under the sponsorship of the Energy Minister. In those circumstances, it has produced the report, and statements have been made. The report is now publicly available for consultation and discussion. After the consultation, and despite the controversial issues associated with our commitments on climate change and nuclear energy, we will produce our White Paper at the end of this year. We will include our conclusions in it, as Governments normally do.

Ombudsman Review

Tony Wright: When he expects to introduce legislation to implement the conclusions of the ombudsman review.

Christopher Leslie: The Government have made clear their commitment to replace the existing arrangements with a more unified ombudsman body. We intend to publish more details shortly. Any legislation required to implement new arrangements will be made when parliamentary time allows.

Tony Wright: My hon. Friend will know that it was a Labour Government in the 1960s who introduced the ombudsman system to protect the citizen against acts of maladministration by state officials, a move that was opposed by the Conservative party. We have had a review that has been around for a long time saying that the ombudsman system needs to be updated to meet the needs of citizens now. As we were the party that introduced that system, can he guarantee that we will be the party that urgently brings in the product of the review?

Christopher Leslie: I can certainly guarantee that the Government remain firmly committed to a unified ombudsman system. There is much that we can do in advance of any legislation. For example, the new parliamentary ombudsman, when appointed, will continue to undertake the health service ombudsman role as well. We can use this opportunity to resolve any jurisdictional issues, and we can look at co-locating the local government ombudsman with the parliamentary and health service ombudsmen, so that we have a more seamless, single-door approach for the public.

Civil Servants (Employment Tribunals)

Tam Dalyell: If he will make a statement on the circumstances in which junior civil servants are entitled to have their cases submitted to employment tribunals in cases of alleged misconduct.

Christopher Leslie: Civil servants have the same rights of access to employment tribunals as other employees.

Tam Dalyell: In the light of Lord Butler's remarks in the other place, to which my hon. Friend the Minister's attention has been drawn, do we have the assurance that the junior civil servants in the Moore-Sixsmith case will be treated according to fair process?

Christopher Leslie: The former Cabinet Secretary, Lord Butler of Brockwell, said that the relationship between special advisers and civil servants was generally very productive. As well as the general right to access industrial tribunals, civil servants also have extensive internal appeal opportunities, to the civil service appeal board and to the civil service commissioners. My hon. Friend will accept that it would not be appropriate for me to detail the particulars of any individual case on the Floor of the House of Commons.

Julian Lewis: Is it not rather worrying that so many civil servants have had to look to appeal procedures as a result of their run-ins with one Cabinet Minister? The Secretary of State for Transport, Local Government and the Regions lost a press officer when he was at the former Department for Education and Employment, and since then he has lost a head of press, a deputy head of press and junior press officer. He has even, belatedly and reluctantly, lost a special adviser. Should not the right hon. Gentleman take out some sort of block booking with the appeals service?

Christopher Leslie: That was very droll. We have been around the block on this matter with the hon. Gentleman far too many times. I do not know whether he is getting bored with asking the same question, but I am certainly getting bored with answering it. The permanent secretary has issued his statement and dealt with all these matters. It is time that the hon. Gentleman put them into perspective.

Ministerial Code of Conduct

Andrew Turner: If he will revise the ministerial code of conduct.

Barbara Roche: A revised ministerial code was published in July 2001. Since then, in response to a recommendation from the Public Administration Select Committee, the Government have agreed to amend paragraph 27 of the code.

Andrew Turner: I thank the Minister for that answer. Is she aware that the Deputy Prime Minister has just said that the ministerial code will not be contained in the future civil service Act? Is it right that the Prime Minister should be judge, jury and—occasionally—executioner with regard to breaches of the civil service code when he has not justified the trust that people placed in him in connection with the cases of the hon. Members for Leicester, East (Mr. Vaz), for Coventry, North-West (Mr. Robinson) and the Secretary of State for Transport, Local Government and the Regions? When the Prime Minister needs our trust, would it not be appropriate that he earns it?

Barbara Roche: That was the most astonishing outburst. In response to the report by the Public Administration Committee, the Government have revised the civil service code. That code was left unaltered by the previous Conservative Administration whom, if the hon. Gentleman had been in the House at the time, I am sure that he would have supported. My right hon. Friend the Prime Minister has published the ministerial code and altered it in the way recommended by the Select Committee. I am sure that that action has the overwhelming endorsement of the House.

Gareth Thomas: Despite the attitude of the hon. Member for Isle of Wight (Mr. Turner), does my hon. Friend the Minister think that it would be useful to have a meeting with Opposition Front-Bench Members on this issue? At such a meeting, would she consider raising with them the report from the Public Administration Committee published in February last year? It touched on this matter, and included the concern that the Opposition could not give a categoric assurance that Short money was being used exclusively for parliamentary purposes. Is there any information from the Opposition on that matter?

Barbara Roche: Of course, I should be delighted to meet the Opposition at any time. My door is always open to any hon. Member. If the Opposition want to raise the matter with me, I should be delighted to discuss it with them.

Andrew MacKay: Does the Minister agree that it is essential that the ministerial code be amended to ensure that Ministers at all times comply with the Parliamentary Commissioner for Standards and the Committee on Standards and Privileges and not avoid their recommendations, as the Deputy Prime Minister did?

Barbara Roche: That is not the case. Let me deal with this once again, as Conservative Members peddle this line at every opportunity. The Committee on Standards and Privileges has investigated the matter and dismissed all charges of impropriety. It reflects no credit on Conservative Members to peddle this line time and time again. I strongly believe that it brings the House into disrepute.

Andrew MacKinlay: What is wrong with giving a statutory base to the ministerial code?

Barbara Roche: The reason is very clear: Ministers, quite rightly, are responsible to Parliament.

Tim Collins: Most people will recognise that Ministers are accountable to the Prime Minister and the Prime Minister decides whether they are in violation of the ministerial code. As the hon. Lady says that she is so happy for us to have a conversation about this, I am delighted to do so. First, will she confirm whether the amendment to the ministerial code recommended by the Public Administration Committee and accepted by the Government has been made with immediate effect or will it take effect only when the ministerial code is next revised after the next election? Secondly, will she consider revising the ministerial code to include a specific provision that Ministers should tell the truth in all circumstances, not just to this House, and then send a copy to the Transport Secretary?

Barbara Roche: The Government inherited the original wording of paragraph 27 of the code from the previous Conservative Government. We accepted that announcements on Government policy should be made straight to Parliament.
	I will of course be delighted to meet the hon. Gentleman. He will be aware that the code's opening paragraph makes it perfectly clear that Ministers' responsibilities are to the public and to Parliament.

Dennis Skinner: Is the Minister aware that for the past quarter of an hour the House has been discussing the fate of three people in one Department? One—the journalist, the friend of the media, the Tory BBC and all the rest—is being treated like an Olympic gold medallist. I remind the House, the Minister and the Tories that way back, when the Tories were in power, they dismissed 20,000 miners at a stroke and never shed a single tear. Then they got stuck into the shipbuilders, the textile workers and all the rest. Let us get on to the real people for a change.

Barbara Roche: My hon. Friend is absolutely right. The Conservative party knows all there is to know about unemployment policy in that respect.

David Heath: Notwithstanding the Minister's reply to the right hon. Member for Bracknell (Mr. MacKay), does she understand that members of the Standards and Privileges Committee believe that there would be great benefit in incorporating in the ministerial code of conduct an explicit requirement to co-operate fully with both the commissioner for standards and the Committee? Will she reflect on that and consider it further?

Barbara Roche: I appreciate that point and understand that it has also been made by the hon. Member for North Cornwall (Mr. Tyler) in business questions. When the consultation process is under way, the hon. Gentleman and his hon. Friends may well want to make representations of that kind.

E-Mail

Lawrie Quinn: If he will make a statement on progress towards his target for making electronic communications from the public to all Government Departments feasible.

Barbara Roche: All Departments can be contacted via e-mail. The Government are committed to providing those services that can be delivered electronically by 2005. The latest figures show that more than 50 per cent. of Government services are now available online, with 74 per cent. predicted by the end of this year.

Lawrie Quinn: Has the Minister had a chance to study last night's Adjournment debate in the name of my hon. Friend the Member for Nottingham, North (Mr. Allen)? Can she confirm that the so-called digital divide will not be used as an argument by the civil service or the Government to prevent targets being met or improved upon so that the public can have access to e-government?

Barbara Roche: I am aware of the debate that took place last night and can give my hon. Friend the reassurance that he needs. It is right for us to ensure that we can deliver more services online, and it is also right to try to ensure that people who are currently without internet access receive those services. That is why—to give one example—the Department of Trade and Industry and the Post Office have just completed a six-month pilot of public information kiosks in post offices.

Simon Thomas: Seventy-four per cent. is an encouraging figure, but will the hon. Lady look at how many online Government services are accessible to people who do not have Windows? An increasing number of services are accessible only if one has Windows, so that rules out people who use Apple, Unix or other software. Will she ensure that the Government's choice of software is dictated by the need for maximum access rather than by relationships with software companies?

Barbara Roche: As a former DTI Minister, I understand the hon. Gentleman's point and will ensure that it is brought to the attention of the relevant officials in the Department.

Michael Fabricant: Does the Minister agree that there should be two-way communication? There should be ways for the Government daily to describe their policy to the electorate. For example, they could explain why, today, there will be no statements on Zimbabwe, on the police dispute or on the fact that the channel tunnel is closed. All we shall have is a worthy—although no doubt important—statement on audits and accountability.

Barbara Roche: That was a valiant try—the hon. Gentleman is ingenious in his methods. When the Government have something to communicate to the House on all those matters, I am sure that he will be the first to know.

Civil Service Bill

Norman Baker: When he expects the civil service Bill to be published; and if he will ensure that it includes measures to reinforce civil service impartiality.

Christopher Leslie: The Government are committed to introducing civil service legislation and to maintaining an impartial civil service. Any legislative programme will be announced in the normal way.

Norman Baker: Did the Minister read the comments in The Times today of Jonathan Baume, the leader of our senior civil service union? He warned that the civil service is being undermined by Ministers through the drip-feed of unattributable leaks and that it is being politicised by stealth. Does the Minister agree that we need to take action to ensure that the impartiality of the civil service is not further undermined? Will he begin by rescinding the powers that have been given to special advisers Alastair Campbell and Jonathan Powell to issue instructions to impartial civil servants?

Christopher Leslie: The hon. Gentleman should not believe everything he reads in the newspapers. We have always emphasised our commitment to a permanent, impartial civil service of the highest standard as a cornerstone of the British constitution. It is about time that we heard more tributes and less criticism of the civil service, which is helping the Government to deliver our public service reforms, as well as economic prosperity and policies such as the national minimum wage. Our goal is to have an Administration who deliver results and we want to bring in the best people to help to implement our policies.

Patrick Cormack: Will the Bill contain a clause restricting the number of special advisers in any one Department, and will it also define precisely what their role should be?

Christopher Leslie: As we said before the Select Committee on Public Administration, we are minded to consider questions such as a cap on the number of special advisers. All those matters will be dealt with in future consultation. I understand that the Cabinet Secretary will make a speech on the issue shortly.

"Women and Public Service"

Meg Munn: If he will make a statement on the Cabinet Office consultation document "Women and Public Service".

Barbara Roche: The report "Better Services—Better Working Lives" was published on 10 December. It reported on women's experience of education and health services and the reforms being introduced by the Government.

Meg Munn: I thank my hon. Friend for that answer.
	Given the number of women who work in public services, what percentage of women would my hon. Friend like to see in senior management and what suggestions does she have for achieving it?

Barbara Roche: I should like to see the number of women in such positions to be 50:50—as we are in the population. Some progress is being made but we need to do much more. That is why we are holding a seminar on women taking up public appointments. It is also important that, through the election of women Members of Parliament, the House should reflect women in the country far more than it does already.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Geraldine Smith: If he will list his official engagements for Wednesday 13 March.

Tony Blair: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Geraldine Smith: The Prime Minister will be aware of Consignia's current proposals, which threaten the financial position of the Post Office, jeopardise the provision of post office services and threaten thousands of postal workers' jobs. In view of that and of the fact that the Post Office is, after all, a publicly owned company, will the Prime Minister tell me what representations he has made to Postcomm—the postal regulator—about those appalling proposals? Will he also tell me whether he has asked for an extension of the consultation period, because it has been appallingly short?

Tony Blair: I entirely understand people's concerns about Postcomm's proposals. As my hon. Friend will know, Consignia—the Post Office—faces major structural challenges to do with changes in technology, changes in the market and changes in the liberalisation of postal markets right across Europe, but I know that it will be mindful of the primary duty of Postcomm, which is to protect the universal service. I know also that people will listen very carefully to the representations being made by my hon. Friend and many others, and I am sure that we shall find a way through that allows us to make the necessary changes to the Post Office, while ensuring that basic services are protected.

Iain Duncan Smith: Now that the Prime Minister has finished his latest Government relaunch, may I take him back to phase 1 of new Labour? In his 1997 election manifesto, the Prime Minister promised "zero tolerance" of street crime. Five years on, will he tell us exactly what he meant by that?

Tony Blair: Yes, I meant that it is important that the Government get crime down, and I am happy to tell the right hon. Gentleman that crime has actually fallen under this Government since 1997. It is true, however, that street crime has gone up very sharply in London and elsewhere in the last year. It is precisely for that reason—

Eric Forth: What are you doing?

Tony Blair: The right hon. Gentleman asks what we are doing. First, there are more police officers—more than 1,000 in the last year. Secondly, there are major changes to the criminal justice system. Thirdly, we are making sure that we have sufficient secure accommodation places for young offenders. In each of those areas, therefore, we are taking action. Yes, I accept entirely that street crime has been a problem, particularly in the last year, but we are acting on it.

Iain Duncan Smith: The Prime Minister, as ever, talks about the things that he was doing, but he fails to recognise that none of them has had any effect on bringing down street crime. In London alone, there are 218 street crimes every day; 150 knife crimes every week; and 275 gun crimes every month—so much for phase 1 and failure, but no apology. In phase 2, the Prime Minister made another manifesto pledge. [Interruption.] Labour Members do not like being reminded of what they promised, so let us remind them. He said that he would bring 100,000 more criminals to justice under the next phase of Government. Was that not another worthless pledge?

Tony Blair: No. First, I shall deal with street crime. Contrary to what the right hon. Gentleman has just said, I did not say that there was no problem with street crime; I admitted that there was a problem. He said that we were refusing to say what we would do about it. Let me repeat to him that we need extra police officers; we have got 1,000 extra in London. We need measures to change the criminal justice system; we are taking those measures. We need more places in secure accommodation; that is precisely what we are doing.
	As a result of the Metropolitan police safer streets initiative, taken in the last few weeks, there has been a 15 per cent. drop in street crime. However, we need to do more. We need even more police officers, which is exactly why we are increasing the numbers to the highest level that this country has ever seen. We need to make sure that the Proceeds of Crime Bill goes through so that we tackle some of the organised crime. Many of its measures are being opposed by the Conservative party in Parliament. We need the major changes to the criminal justice system outlined in the Auld report. We support those changes and we support the extra numbers of police through investment—does he?

Iain Duncan Smith: As ever, when the Prime Minister is asked a direct question, we get more promises and pledges, but never any delivery. I asked him a specific question about his promise to bring 100,000 more criminals to justice. He did not answer it. The reality is that his figures show that he has gone backwards. Some 80,000 fewer criminals are being brought to justice. Nine out of 10 crimes go unpunished and, when criminals are caught and convicted, under his Government they are released early to commit more crimes. Surely he must now agree with the chairman of the Victims of Crime Trust, who said:
	"I have never seen the criminal justice system in such disarray."
	Is that a good verdict on phase 2?

Tony Blair: The right hon. Gentleman accuses us of making promises but not delivering on them. This country has the highest numbers of police that it has ever had. The reason for that is additional investment. The vast majority of police in this country do a superb job, but two things are needed: first, we need to make sure that we carry on getting additional police numbers, which we will do; and, secondly, we need to introduce the major changes to the criminal justice system that we want.
	If we look at crime over the past few years, we see that there is a real problem with street crime. However, overall crime is down. Let us compare that with the record of the 18 years under the Conservatives. The Conservatives cut police numbers before we came to office—[Interruption.] Yes, they did. The Conservatives scrapped the housing allowance, which did more damage to the recruitment of police officers. The number of convictions fell by a third. The amount of time that it took to get persistent young offenders to court soared, and crime doubled. The last people from whom we will take lessons on crime are the Conservatives.

Iain Duncan Smith: I remind the Prime Minister— I know that he does not like being reminded of this—that he has been in power for nearly five years. He cannot go on blaming somebody else. Not one of the measures that he has mentioned has had a positive effect. Street crime is rising, violent crime is rising, and muggings are up. All of those are failures by the Government. Worse than that, fewer people are being brought to justice and more dangerous criminals are on the street—no wonder police morale is at an all-time low.
	The Prime Minister gave one pledge: that he would put more police on the streets. The only place he has put them on the streets is here in Westminster, where they are getting angry about this lot. The reality sits on his shoulders: phase 1, make the promise; phase 2, break the promise; phase 3, blame anybody else.

Tony Blair: Let us go back to police numbers. As I said, the vast majority of police officers in this country do a superb job, with immense dedication and commitment. Let us remember that when we came to office the numbers of police in London and elsewhere were falling; today, we have the highest number of police officers that we have ever had. Since we came to office, car crime and burglary have gone down. It is true that street crime has gone up, which is precisely why we are introducing these measures: more secure accommodation, changes to the criminal justice system and more police on the beat. All of that requires support for our proposed changes to the criminal justice system and extra investment. Let me repeat what I said a moment or two ago: that is what we say is the solution—will the right hon. Gentleman now back it?

Karen Buck: Those of us with an interest in homelessness have warmly welcomed this morning's announcement that in two years' time the Government intend to end the use of bed-and-breakfast accommodation for families. Does my right hon. Friend the Prime Minister agree that bed and breakfast is only the sharp end of a housing crisis that is affecting public sector recruitment in London as well as homelessness? Will he ensure that the comprehensive spending review makes resources available to boost housing supply, particularly in London and the south-east, to help with public sector recruitment and to fulfil the target on bed and breakfast?

Tony Blair: I am sure that what my hon. Friend says about the problems of housing in London and elsewhere is true. It is for that reason that we have been seeking to increase investment. In particular, the starter homes initiatives for staff such as teachers, police officers and nurses in London will ensure that at least hundreds of people in those professions get the chance of a decent home in London, which they need to go to work.
	As for homelessness more generally, my hon. Friend will know that we have cut the number of rough sleepers, but we are well aware of the fact that bed-and-breakfast accommodation is not the right accommodation—medium or long term—so we are looking urgently at how we manage to increase the provision of housing and reduce the reliance on bed-and-breakfast accommodation.

Charles Kennedy: When thousands of police officers make their way to Westminster to lobby us all, and when one listens to the genuine sense of anger and betrayal that they feel, will the Prime Minister take this opportunity to explain to them why they are so mistaken?

Tony Blair: I believe, as I said a moment or two ago, that the vast majority of police officers do a superb job. They do a great job with immense dedication and commitment. I think, however, that the right hon. Gentleman will find that the vast majority of police officers agree with the changes that we are making to the criminal justice system and agree with much of the police reform that we want to introduce. It is true, however, that there are points of disagreement. They are now subject to conciliation, which I hope very much will allow us to reach an agreement. As the chairman of the Police Federation said earlier, the right hon. Gentleman will find that there is a very large measure of agreement on the Government's programme between the police and the Government.

Charles Kennedy: I do not know about the points of disagreement, but the points of agreement are pretty well camouflaged, judging by what has been said by police officers today. Does the Prime Minister acknowledge that he is now beginning to preside over the biggest period of public sector discontent since the winter of discontent? Whether it is teachers in London, police officers at the door here at Westminster today or rail workers, is not the hard fact of the matter that many public service employees do not value the Government because they do not think that the Government value them?

Tony Blair: There are about 140,000 more public sector staff compared with when we came to office. There are more nurses, more doctors, more police and more teachers. The truth, however, is that, no matter how much money is put in and no matter how many people we recruit, the Liberal Democrats never think that it is enough because they think that there is a bottomless pit and that we can simply get as much money out of it as they can possibly imagine. The truth of the matter is that, of course, we value public service staff enormously, but I think that the Liberal Democrats will make a very big mistake if they set their face, as they have, against any changes in the health service, any changes in education or any changes in the police or criminal justice. It is important that we work with staff to get these reforms but, in circumstances in which we are putting in the largest investment any Government have ever put into health, education and policing, it is also important that we make sure that we get the reforms necessary to make that money work.
	I said to the right hon. Gentleman a moment or two ago that the vast majority of the police do a fantastic job. He will have seen from the advertisement of the Police Federation that it supports much of what the Government are doing. There is a process of conciliation and we will go through it. However, I think that he and several other Members of the House will find, in a few weeks' time, that we are with the police and on the same side making the changes that we all want to see.

Helen Jackson: Does my right hon. Friend agree that unilateral action by major states in this modern, interdependent world is usually inappropriate? Was he as angry as the steelworkers in my constituency at the action taken by the Government of the United States to impose tariffs on our steel exports—the best exports in the world—and will he support his Secretary of State for Trade and Industry in making direct representations to the United States Government to get them to reverse that decision?

Tony Blair: Of course we totally disagree with the decision taken by the United States and we have been making our views clearly known to the American Administration for the past few months. The decision will be subject to a procedure under the World Trade Organisation, invoked by the European Union. I very much hope that the United States changes its position. I very much hope that if the WTO rules in our favour, it will change its position. I think that most people realise that not merely is the decision wrong in terms of international trade, but it is not an answer to the problems of the US steel industry.

John Randall: Perhaps the Prime Minister can explain why this lunchtime not one of the 55 London Labour MPs could be bothered to meet rank-and-file members of the Metropolitan police across the road. Will he arrange to meet them and listen to what they really think, apologise and show more bottle than his MPs?

Tony Blair: I am sure that Members on both sides of the House will meet police officers. Indeed, the Home Secretary met them this morning and we are well aware of their concerns.

Nick Palmer: Does the Prime Minister agree that if the serious concerns about Iraqi weapons of mass destruction are borne out by further information, the United Nations should be the first port of call for raising the problem so that we get the broadest possible coalition to counter the threat?

Tony Blair: Of course it is to the United Nations that we have constantly gone because of the problems of Iraq acquiring weapons of mass destruction. It is for that reason that many, many UN Security Council resolutions call on Iraq to destroy those weapons and to let the inspectors back into the country to ensure that they are destroyed. For that reason, we will continue to put maximum pressure on Iraq to come back into line with international law and UN Security Council resolutions.

Nigel Waterson: Will the Prime Minister tell the House whether he favours an amnesty for IRA terrorists on the run—yes or no?

Tony Blair: As I said in Prime Minister's questions last week, we have no doubt that the issue has to be dealt with. How that is done, however, is a matter of discussion. I simply say to the hon. Gentleman and to those of his hon. Friends who oppose dealing with the problem at all, that over the past few years we have made very significant progress in Northern Ireland. People sometimes forget just how enormous that progress is. I hope that whatever measures we take, people will look at them in that light. I also hope that when people gaze across to the situation in the middle east, they see what happens when a peace process fails.

Andy King: May I welcome the Government's commitment to eradicate poverty and social exclusion? Is my right hon. Friend aware of any steps that are being taken to ensure that families on the minimum wage and working families tax credit are not inadvertently penalised for working?

Tony Blair: The very reason why we introduced the combination of the minimum wage and the working families tax credit was to ensure that families are better off when they work. Those who work full time, with a minimum income of about £225 a week as a result, are some £90 a week better off than they would have been on income support. That makes a huge difference.
	One reason why we have been able to put our public finances in such a healthy position is precisely because we got down the bills for the social and economic failure of the Conservatives. Unemployment rose to more than 3 million under the Conservatives; we have managed to get 1 million extra jobs in the economy. My hon. Friend will know that many of those people who are working are doing so precisely because we have made work pay.

Iain Duncan Smith: Does the Prime Minister agree with what the Secretary of State for Transport, Local Government and the Regions said last December? He told the House that
	"there is no reason why . . . there should be large increases in council tax."—[Official Report, 4 December 2001; Vol. 376, c. 169.]

Tony Blair: I do, because the amount that we have given in the local government settlement—more than 7.5 per cent.—makes the settlement one of the best that local government has had for a long time. In the five years of this Government, there has been a 20 per cent. real terms increase in the amount of money that we have given to local government. If the right hon. Gentleman compares that with the five years of the previous Government, when there was an increase of less than 1 per cent., he will see that my right hon. Friend was entirely justified in making that comment.

Iain Duncan Smith: It is another fine mess that the Secretary of State has gotten him into. The Prime Minister needs reminding about something. He seems to think that everything is all right, but bills are set to rise by three times the rate of inflation for the fifth year in a row under this Government. The reality is that a typical household now pays £300 a year more in council tax than when he came to power. He perhaps does not visit his constituency that much, but he may want to recognise that those who have the worst of it will be very angry. It is a stealth tax by any means. I remind the Prime Minister that a few years ago he said:
	"We've no plans to increase taxation at all."
	Yet again, is not the reality: phase 1, make a promise; phase 2, break a promise; phase 3, blame anybody else?

Tony Blair: As I pointed out to the right hon. Gentleman a moment or two ago, it is councils that set council tax bills, but they do so on the basis of the settlement from central Government. The fact is that that settlement has been far more generous than during the previous Conservative years. Nor is the settlement merely more generous; when we announced in the comprehensive spending review that we were increasing it by 7.5 per cent., his party said that that was too generous. If he were on this side of the House, council taxes would be even higher.

Hilton Dawson: In fair trade fortnight, will my right hon. Friend welcome initiatives such as that in Garstang, in Lancashire, which is linking with New Koforida, a village in the cocoa-producing area of Ghana? Are not such local initiatives precisely in line with new economic policy for African development, and with efforts to make globalisation work for the poor across the world? [Interruption.]

Tony Blair: I am sorry that Opposition Members jeer, because the point that my hon. Friend makes is right. As the Chancellor has said, we have recently taken some £200 million off Ghana's debt. That has been achieved because Ghana qualified under the heavily indebted poor countries rules, and it has therefore reduced its debt repayment substantially. That money can now go into its health and education services. As a result of changes led by this Government, not only has aid to Africa been doubled; because of debt relief—led by my right hon. Friends the Chancellor and the Secretary of State for International Development—countries across the world can put their money into basic services that improve the lives of their people, rather than into debt repayments. That is not just morally good and right for Africa; it also means that we can do business with those countries in the future, and that they will be more wealthy and prosperous, and more stable as a result.

Jenny Tonge: Is the Prime Minister happy—[Hon. Members: "Yes."] Is the Prime Minister happy to allow the teaching of creationism alongside Darwin's theory of evolution in state schools?

Tony Blair: First, I am very happy. Secondly, I know that the hon. Lady is referring to a school in the north-east, and I think that certain reports about what it has been teaching are somewhat exaggerated. It would be very unfortunate if concerns about that issue were seen to remove the very strong incentive to ensure that we get as diverse a school system as we properly can. In the end, a more diverse school system will deliver better results for our children. If she looks at the school's results, I think she will find that they are very good.

Claire Ward: I should tell my right hon. Friend that, like many of my colleagues, I shall meet police officers this afternoon.
	Does my right hon. Friend agree that the continuing disproportionate response of Israeli armed forces in Palestine is making it increasingly difficult to achieve a peaceful solution? Will he ensure that this Government, in supporting the views expressed by Kofi Annan, concentrate on bringing both sides back to the negotiating table before any more innocent Palestinian or Israeli lives are lost?

Tony Blair: I agree very much with the United Nations Security Council resolution that demanded the immediate cessation of all acts of violence. This is a situation in which tragedy is rapidly turning into catastrophe for that part of the world. What is necessary—and I hope that it will arise from the visit of Anthony Zinni, the US special envoy—is, first, that minimum steps of security be agreed on both sides to restore confidence; and, secondly, that we get back into a proper process that leads to a settlement of the issues between the Israelis and the Palestinians.
	In my view, there is no alternative but to start from two fixed points of principle in that process. The first is the right of Israel to exist securely, and that should be accepted not just by the Palestinians but by all the Arab world. Secondly, there should be a viable Palestinian state, and that should be accepted by Israel and the international community. If we started from those two fixed points of principle, the other matters could be negotiated. What we need in the meantime are the minimum steps of security and confidence that would allow some of the hatred and bitterness that exists at the moment to ebb and allow space for the process to begin again.

Elfyn Llwyd: The Prime Minister will be aware of the mass lobby of Parliament by the Police Federation today. Given that we all expect the absolute loyalty of the police—and receive it—is not it high time for the Home Secretary to enter into respectful negotiations with the Police Federation and to desist from rubbishing it from afar?

Tony Blair: My right hon. Friend has been entirely respectful in the conduct of the negotiation. Most people accept that three things must be done: first, we need to increase the number of police officers; secondly, we need reform in policing to ensure that we use police officers more effectively and that they spend as much time as possible out on the street and not in the station; and, thirdly, we need to make the changes to the criminal justice system that we all—well, certainly Labour Members—want to see. For that reason, it is important to continue in conciliation, which is where we are, with the police officers so that we ensure that in the end we get an agreement, because the vast majority of police officers actually support the programme of change. They have real concerns about some of the changes to their terms and conditions of employment, and that is precisely what is the subject of conciliation at the moment.
	I think that the hon. Gentleman will find that at the end of the process the vast majority of us agree on all three things, but they can be done only if people are first prepared to agree the extra investment that increases police numbers and, secondly, to agree to the fundamental changes in the criminal justice system that will mean that when people are arrested and brought to court, they are subject to a proper judicial process.

Paul Goggins: The Prime Minister will be aware that on Monday the Queen began the final countdown to the Commonwealth games when she launched the jubilee baton relay. With the City of Manchester stadium almost ready, with 500,000 tickets already sold and with 10,000 volunteers ready to welcome the athletes and visitors, will my right hon. Friend ensure that all Government Departments continue to liaise with the games organisers so that in July in Manchester we can all look forward to a wonderful celebration of international sport and friendship?

Tony Blair: The stage is indeed set for the Manchester Commonwealth games to be enormously successful. As my hon. Friend pointed out, more than 500,000 tickets have been sold already. Manchester, which is an exciting, go-ahead city at the moment, is well geared up for it. I assure him that all Government Departments will carry on working with Manchester to ensure that it is the success and showcase for the city that we want to see.

Angela Watkinson: Will the Prime Minister give an assurance that I can take to the Police Federation this afternoon that community support officers, as proposed in the Police Reform Bill, will not be imposed on police authorities by ring-fencing or any other means, and that the authorities will retain the freedom to spend their money on real police officers?

Tony Blair: Of course community support officers will not be imposed; there has never been any question of that. The hon. Lady should realise that, with the number of additional police officers and the increasing numbers of civilian staff that we have, we must have the flexibility to use different methods to police our communities properly. Indeed, the Leader of the Opposition paid tribute to the community warden scheme in Kent a short time ago. Such schemes are operating all over the country, and they will not be imposed on people, but there has to be flexibility to use civilian and police staff better for the future.
	In circumstances where we are increasing the number of police officers, paying tribute to the fantastic work that they do and increasing the number of civilian staff, it is very difficult to say that we are taking our obligations to the police other than seriously. I hope that the hon. Lady will agree that the changes in the Police Reform Bill should go through. I hope that she and other Conservative Members will support the changes to the criminal justice system and drop their opposition to the Proceeds of Crime Bill. I hope that all Members will support the extra investment in our police that we want to see.

Audit and Accountability (Central Government)

Andrew Smith: With permission, Mr. Speaker, I should like to make a statement on the Government's response to Lord Sharman's report, "Holding to Account", which made recommendations about audit and accountability in central Government. Copies of our response are available in the Vote Office.
	The structure of audit and accountability, springing from the Gladstonian reforms, is an important matter. The House and the country have benefited enormously from the work of the Comptroller and Auditor General and the National Audit Office. While they are accountable to the House, they have a remit that is independent of both Government and Parliament.
	Over the years, Members of the House, and particularly the Public Accounts Committee, have expressed concern that the remit of the Comptroller and Auditor General has become artificially restricted. It has been the policy of the Government to appoint the CAG to audit each non-departmental public body set up since 1997, but despite that commitment to openness, there are still significant areas of central Government where the CAG is not the auditor, including about 50 non-departmental public bodies that had been established previously with auditors appointed by individual Secretaries of State. In a number of areas, the CAG is also dependent on negotiated administrative access.
	In debates on the Government Resources and Accounts Bill, the subject of the CAG's remit was raised and I undertook to review the position. Accordingly, I set up an independent review of audit and accountability in central Government to look at all areas of the accountability framework and to take evidence from interested parties. I am grateful to Lord Sharman for leading that review, and to all members of the steering committee, including, when he was Chairman of the Public Accounts Committee, the right hon. Member for Haltemprice and Howden (David Davis), my right hon. Friend the Member for Swansea, West (Mr. Williams) and the hon. Member for Newbury (Mr. Rendel).
	Lord Sharman reached independent conclusions and made recommendations that were addressed to the Government, the Comptroller and Auditor General, the Public Accounts Committee and the Public Accounts Commission. The response that I am publishing today sets out the Government's position on Lord Sharman's report. In considering Lord Sharman's recommendations, I have been mindful that reforms need to command confidence on both sides of the House. They also need to be workable, and I am very grateful for the constructive discussions that have taken place with the CAG and his staff and which are reflected in the response.
	I am pleased to inform the House that the Government have accepted the main recommendations that Lord Sharman directed to the Government and that we support those addressed to others. There are five central recommendations. First, the Government agree that the Comptroller and Auditor General should audit all non-departmental public bodies. That will make him the auditor of bodies such as the Environment Agency, English Partnerships, English Heritage and the Housing Corporation. Secondly, subject to legislation, that extension to non-departmental public bodies will include those that are established as companies, for example the Student Loans Company, the Film Council and the National Consumer Council. Thirdly, the Government agree that the Comptroller and Auditor General should have statutory access to the documents needed for his audit work in place of the current non-statutory arrangements. We welcome arrangements to ensure that that right of access is exercised to minimise any additional burdens on either public or private sector bodies.
	Access by the Comptroller and Auditor General to documents will be extended by right, for example, to registered social landlords, train operating companies and contractors, including those in private finance initiative contracts. Fourthly, the Government accept that information underpinning reports on progress against targets on public service agreements must be reliable. We therefore propose the extension of external validation of departmental data systems relating to those targets. The Government intend to invite the Comptroller and Auditor General to take responsibility for the validation of such data systems, usually on the basis of a three-yearly review.
	Finally, the Government welcome Lord Sharman's acknowledgement of the steps being taken to promote strong management and innovation across government in the delivery of public services. Before implementing those proposals, the Government will consult bodies affected by the changes. I am confident that the proposals that we are setting out today will strengthen audit and accountability and improve transparency in the interests of this House and all those we represent. I commend the new arrangements to the House.

John Bercow: May I begin by thanking the Chief Secretary to the Treasury for his statement and for allowing me advance sight of it? I warmly welcome, as I suspect do many right hon. and hon. Members on both sides of the House, the initial establishment of the Sharman committee which, the right hon. Gentleman will acknowledge, followed insistent pressure during the passage of the Government Resources and Accounts Bill from my immediate predecessor as shadow Chief Secretary, my hon. Friend the Member for West Dorset (Mr. Letwin) and, importantly, my right hon. Friend the Member for Haltemprice and Howden (David Davis), now the chairman of the Conservative party but then, of course, the respected Chairman of the Public Accounts Committee.
	The Chief Secretary was right to acknowledge the importance of the work of the steering committee, to congratulate my right hon. Friend the Member for Haltemprice and Howden and, in addition, to acknowledge the important contributions of the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Newbury (Mr. Rendel). I cannot help wondering whether the Chief Secretary should be subjected to a little independent audit himself. After all, Lord Sharman reported on 13 February 2001, 393 days ago. There has been justifiable consternation at the inordinate delay in the Government's reply. Lord Sharman has complained, as has the Chairman of the Public Accounts Commission, the right hon. Member for Swansea, West, bemoaning a delay which he described as "abnormally long". Baroness Noakes, a distinguished former president of the Institute of Chartered Accountants in England and Wales, lamented Ministers sitting on their hands. Lord McIntosh of Haringey, as recently as 26 February, was under the misapprehension in a debate in the other place that the report had been published; he said that he was "completely astonished" to discover that it had not been.
	As for the substance of this important issue, no one can overstate the importance of strong and independent audit of public expenditure or, indeed, of accountability for the way in which public money is used. The Chief Secretary was right to pay warm tribute to the Comptroller and Auditor General and to the National Audit Office. I echo that tribute. Their work is invaluable, and so is the important report of Lord Sharman.
	I shall pose a number of questions to the Chief Secretary. We welcome the extension of the power of audit to all non-departmental public bodies. Does the right hon. Gentleman agree that as there are 1,025 such bodies the length and breadth of the United Kingdom, which employ 30,000 people and spend approximately £25,000 million, it is right that they should be comprehensively audited and investigated? Transparency is of the essence.
	Does the Chief Secretary agree that there are other routes to effective scrutiny? For example, my right hon. Friend the Leader of the Opposition has urged that the heads of such non-departmental public bodies should appear before Select Committees for confirmation hearings. Does the Chief Secretary agree, or will he at least undertake to consider the suggestion?
	Does the right hon. Gentleman agree that the suggestion that the National Audit Office should audit companies which are established by public bodies could usefully have been applied to the New Millennium Experience Company? That is a striking example of a body which, if so scrutinised, would itself have benefited and hugely relieved the overburdened and long-suffering taxpayer.
	We endorse the call for external validation of performance information for central Government. Such validation should be progressively developed, not least in relation to public service agreement targets, of which there are about 160 covering key areas of government. Those targets are intended, as the report says,
	"to be a clear commitment to the public on what they can expect for their money".
	Does the Chief Secretary agree, therefore, that so far as is possible, the agreement on the credibility of their measurement is of the utmost importance?
	Both the report and the new Chairman of the Public Accounts Committee, my hon. Friend the Member for Gainsborough (Mr. Leigh), have argued that access rights of the CAG should be extended to the BBC. After all, in 2000-01, it spent £2,425 million. Gavyn Davies, a very distinguished figure in our national life, having reviewed the funding of the BBC in 1999 and before he became its chairman, recommended that
	"the Government should amend the Royal Charter to give the National Audit Office inspection rights to carry out periodic financial audits of the BBC's accounts and its fair trading arrangements".
	Why are the Government ignoring that recommendation? Does not the Chief Secretary recognise that there will be widespread disquiet? Has he cooked up a cosy deal with the director-general of the BBC at the expense of licence payers and taxpayers alike?
	We would suggest that the Financial Services Authority should be included in extended audit. Will the Chief Secretary consider extending the Comptroller and Auditor General's access rights to the FSA? Although it is a company limited by guarantee, the FSA is funded by a compulsory levy on firms in its sector and in many ways it resembles a public body. Does the Chief Secretary therefore agree that the grievous distress suffered by many of our constituents as a result of the Equitable Life saga makes a compelling case for greater transparency?
	Of course there should be consultation, but can the right hon. Gentleman offer us some reassurance that the consultation will begin at once and that it will be conducted expeditiously?
	The Sharman report is a step towards greater transparency in public sector accounting, but does the Chief Secretary agree that there is a great deal further to go? Can he undertake to look at the presentation of Government liabilities under private finance initiative and public-private partnership contracts, so that it is clear what the scale of liabilities is? Is he aware that the Government accounts do not always make it perfectly clear how much is spent on what, particularly when responsibility for a function is divided between different levels of government, and that the public have a right to expect greater transparency?
	Does the Chief Secretary agree that the Government have a liability in the form of pensions to be paid in the future that are not reflected in the Government accounts? Has not the Chancellor obscured the presentation of the tax burden through his treatment of the working families tax credit as a tax cut rather than benefit expenditure?
	The report and the Government's largely sensible response to it herald an advance in the scope of audit and in the capacity of the legislature to hold the Executive to account. Nevertheless, more needs to be done. The debate will continue. The Opposition will participate in it with the seriousness and resolve that it merits.

Andrew Smith: I thank the hon. Gentleman for his comments on what he describes as largely sensible action by the Government. In setting up Lord Sharman's inquiry, we were responding to concerns expressed not merely by Conservative Members, but by Members of all parties on the Public Accounts Committee. Today, following Lord Sharman's report, we have taken action where the Conservatives in government did not do so for more than 18 years.
	The hon. Gentleman referred to the time that it has taken to publish our response. It would have been nice if we could have done so sooner; I genuinely believe that it is a good-news statement for the House. However, we faced a choice. We could have replied earlier on the principle, leaving much of the detail and the matters set out in section 3—the protocols for access and so on—to be negotiated later. In such circumstances, many hon. Members, including the hon. Gentleman, would have had a lot of questions about how the detail would work. However, we have come back with a comprehensive and detailed response and he should have welcomed that.
	I noted that it took the hon. Gentleman a long time to get to the substance of the statement; indeed, his remarks were considerably longer than the statement itself. He asked a number of questions. He referred to the New Millennium Experience Company and asked whether it was a good example of a body that would have benefited from access by the Comptroller and Auditor General. The answer is yes. Subject to the points that I made, precisely that access will be provided by our proposals.
	The hon. Gentleman also referred to the position of the BBC. In considering both the original Davies report and that of Lord Sharman, the Government have weighed the matter very seriously. We believe that the editorial independence of the BBC, even in terms of the impression that it could be compromised in any way, should not be risked. That is why we have decided not to proceed with the specific recommendation in question.
	The Financial Services Authority was established relatively recently and its audit arrangements were extensively debated, along with other matters, in the House. The Government have not ruled out the possibility of the Comptroller and Auditor General undertaking a value-for-money study of the FSA in future. Subject to implementation of our proposals, we will consider that possibility.
	The hon. Gentleman asked about the credibility of PSA targets, on which I agree with him. That is why we are taking measures that add to the substantial external validation that is already carried out by the Office for National Statistics and the Audit Commission, the ability of the Comptroller and Auditor General to oversee the data systems as a whole. That should build confidence on all sides in the reliability of the measures that we are taking and help us to not only reform public services, but deliver on our targets.

Alan Williams: May I congratulate my right hon. Friend on his statement? As he said, it represents a victory for the Public Accounts Committee in a battle that it has fought for well over 10 years. His remarks about quangos, companies and validation represent a notable addition to parliamentary accountability, for which I thank him.
	I hope that my right hon. Friend will not think me churlish if I echo one of the points made by the hon. Member for Buckingham (Mr. Bercow) about the BBC. It is unfortunate that he has not seen his way to agreeing with Sharman, who was himself echoing the recommendations of the current chairman of the BBC before he suffered his conversion on the way back from Damascus. I hope that if we advance further arguments in support of the recommendations, he will at least indicate that he is willing to listen to them as positively as he listened to previous arguments.

Andrew Smith: I thank my right hon. Friend for his welcome for our proposals. I should like to place on record my appreciation and that of the House for all his work on this agenda over the years.
	I would never consider any of my right hon. Friend's remarks churlish. I clarified the position on the BBC in my earlier response. The fact that we have made these proposals proves that we are listening. At an early stage of the procedure, I was the only Minister in living memory to appear before the Public Accounts Committee, where I said that with goodwill and co-operation on all sides we could make substantial progress on these matters of mutual concern. That is exactly what we have done today.

Edward Davey: I wholeheartedly welcome almost all the Chief Secretary's statement. In effect, he has announced the Government's complete acceptance of the arguments that I and hon. Members on both sides of the House raised two years ago during the passage of the Government Resources and Accounts Act 2000.
	I join the Chief Secretary in congratulating my noble Friend Lord Sharman. Does he agree that his announcement is an important victory for Parliament, and that he should therefore continue to work closely with hon. Members as he implements the new regime as speedily as possible?
	As for the detail, will the Chief Secretary say more about the Government's proposals for auditing performance measures? Sharman and the Government both favour a step-by-step approach to introducing the external validation of performance information. Will he give a more detailed timetable for full implementation? His statement suggests that the Government are limiting the definition of performance measures to public service agreements, yet surely external validation should cover all relevant public performance measures if we are to have confidence in such figures.
	Finally, does the Chief Secretary realise that there is extreme disappointment and anger about the Government's decision not to extend the Comptroller and Auditor General's remit to the BBC? Does not he realise that his arguments against that are so weak as to be ridiculous and fly in the face of the logic of the rest of his statement? We all share his desire to protect the BBC's independence and editorial freedom, but that is completely irrelevant to financial audit. The NAO has audited universities. Universities have academic freedom, but the NAO's remit nevertheless applies to them. It is ironic that Gavyn Davies, before he became chairman of the BBC, recommended that the NAO should audit the BBC. Will the Chief Secretary explain why on earth the BBC should be exempt from NAO audit given that all other bodies, including private finance initiative contractors, are to be included?

Andrew Smith: I thank the hon. Gentleman for welcoming my statement. As he says, it is a victory for Parliament and for parliamentary accountability. The Government's performance in delivering public services and our other objectives is strengthened by the effectiveness of parliamentary scrutiny. That is the important philosophy that underpins the proposal.
	We have made a huge step by inviting the Comptroller and Auditor General to take overall responsibility for external validation. As regards areas that are already validated by the Office for National Statistics or the Audit Commission, we would not normally expect them to have much more work to do. Ultimately the Comptroller and Auditor General will make decisions on the reliability of the systems in instances that are drawn to his attention.
	It is wise to take a step-by-step approach to these matters. The hon. Gentleman has a point when he says that there are other measures of performance that are not included in public service agreements. It would be sensible to concentrate on those PSAs that are quantifiable. Most importantly, we must accept the responsibility of ensuring that the underlying systems are independently validated.
	I do not intend to repeat what I have said about the BBC. It would be a grave error even to give the impression that its editorial independence was in any sense being called into question.

John McFall: As Chairman of the Select Committee on the Treasury, I welcome my right hon. Friend's proposals. I can do no better than to echo the words of the official Opposition spokesman, who said that the proposals were hugely sensible. Putting the auditing of all non-departmental public bodies on a statutory basis is extremely welcome.
	In the words of Sharman,
	"Audit arrangements should not discourage innovation, change and well-managed risk taking."
	Will my right hon. Friend ensure that that process still goes on?
	Finally, has my right hon. Friend given any thought to merging the National Audit Office and the Audit Commission?

Andrew Smith: I thank my hon. Friend for his comments, and I pay tribute to his work in this area. The answer to his last question is no, I have not given further consideration to that matter. His comments on innovation and risk management are entirely right, and we welcomed the way in which the report of the Comptroller and Auditor General and the National Audit Office showed how properly judged risk and risk evaluation were perfectly compatible with proper accountability for financial probity. As the former Chairman of the Public Accounts Committee said, there is a world of difference between well judged risk and its management, and gambling. We are in favour of the former in these matters, but not the latter.

Edward Leigh: I thank the Chief Secretary for his important statement, and pay tribute to his officials for the constructive way in which they have worked with officials from the National Audit Office. We have made a great deal of progress today. We have ensured that the Public Accounts Committee—recognised by the Sharman report as the senior Committee in the House of Commons—can continue the work that it has carried out since 1861 on directing the harsh light of parliamentary scrutiny into all the nooks and crannies of waste and incompetence inside government. I am, therefore, very pleased with the statement.
	I want, however, to echo comments made by others, particularly the right hon. Member for Swansea, West (Mr. Williams), about the BBC. The Public Accounts Committee feels strongly that, as the BBC levies the equivalent of a poll tax on virtually every household in the kingdom, and as it is a vital national resource, Parliament should not be denied its right to hold this body up to public scrutiny through the National Audit Office. My Committee is fully cognisant of the importance of preserving the editorial independence of the BBC. The NAO already looks after the World Service, and there is no question of its interfering in the independence of its programming. My Committee would never get involved in questions of what programmes should be shown, but we are talking about very large sums of public money, and we want Parliament to be involved.
	My Committee also feels that the civil list should be open to scrutiny by Parliament. The system has worked well with regard to royal palaces and royal travel; there have been no complaints there. We recognise that this is a sensitive area, but the Committee believes that Parliament has a right to hold the civil list to account in the way that other public expenditure is held to account. Having said that, I thank the right hon. Gentleman for his statement, and I pay tribute to my predecessor, my right hon. Friend the Member for Haltemprice and Howden (David Davis), for the work that he has done in this area.

Andrew Smith: I am grateful for the hon. Gentleman's kind remarks, and I join him in congratulating officials not only from the Treasury but from the National Audit Office and the office of the Comptroller and Auditor General. As the hon. Gentleman said, this is a model of how working sensibly, often in sensitive areas, can lead to a sensible way forward being found. I also acknowledge the contribution of his predecessor as Chairman of the Public Accounts Committee, and the contribution that the hon. Gentleman himself is making.
	The hon. Gentleman reminds us of the importance of the constitutional legacy of probity and regularity, and of shining the light of audit and accountability on to affairs for which we have a responsibility. I note what he says about the BBC; I do not intend to repeat my previous remarks on that. He acknowledges that the civil list is a sensitive area. There has been a longstanding bipartisan agreement that Ministers should stand between the civil list—the royal family—and accountability to Parliament, except when there are grant-in-aid issues, as in the examples that the hon. Gentleman mentioned. I think it wise to leave those arrangements in place.

Roger Casale: I welcome these reforms, which will bring greater accountability and transparency to the public finances. As we move to spend more on public services, it is clearly in the public interest that there should be independent external validation of how that money is spent. Do not these reforms mark a real break with the past, as we give substance to our determination deeply to entrench the reforms we are making to the public finances? Opposition Members tend to emphasise that we must stamp out waste, and of course that is right, but greater transparency will also help to identify areas in which we need to spend more. An audit, for example, might have helped the Opposition realise that the capital funding of schools in my constituency fell to £15 per pupil in 1996-97. It is more than £200 per pupil per annum today.

Andrew Smith: My hon. Friend is right. There is a break with the past that is a great step forward in terms of accountability and security of value for money. Value for money does not imply spending as little as possible. Instead, it implies spending for the best possible effect. Without being drawn into my hon. Friend's invitation to make party political points, the Government are keen to engage in that spending.

Nick Gibb: The Chief Secretary's statement is extremely welcome, and especially his acceptance of the importance of strong management across government. To that end, he will be aware that one of the greatest achievements of the NAO in recent years has been the exposure of the level of social security fraud, with about £3 billion being lost every year in terms of both jobseeker's allowance and income support. There are more than 300,000 cases of fraud every year, but only 5 per cent. of those cases are prosecuted. I am not making a party political point. The situation has been the same for more than a decade, during which the accounts of the Department have been qualified by the NAO.
	Will the Minister enter into discussions with his colleague, the Secretary of State for Work and Pensions, with a view to increasing the proportion of prosecutions in an attempt to introduce strong management in this area and to reduce the level of fraud?

Andrew Smith: Not only will I do so, but the Government are already acting on that agenda. We are identifying and bearing down on fraud in social security as in other areas. That did not always happen until quite recently. Performance was not even measured by previous Governments. Further strong management to cut fraud will be brought to bear.

Tam Dalyell: My question is churlish and ill tempered. As one who was rebuked and chastised by the late Donald Dewar, in 1998, for daring to suggest that the Scottish Parliament's costs would rise a penny above £40 million, will my hon. Friend ask either the Paymaster General or the Financial Secretary to examine carefully the assertions in today's edition of The Scotsman that consultant's fees alone are now £40 million? The cost of the project has increased by at least eightfold on what was originally envisaged. Is my right hon. Friend able to draw any lessons from a giddy escalation in costs?

Andrew Smith: My hon. Friend will be well aware that these are devolved matters for which the Scottish Parliament and its audit and accountability relationships are responsible.

John Burnett: It is important that the full audited accounts of the bodies concerned be put in the public domain. Does the Minister agree that these accounts, and district auditors' full accounts on local authorities, should always be put in the public domain in unabridged form, with names and details provided in respect of all major contracts?

Andrew Smith: I support the general principle of publication and information being in the public domain. I hesitate to give a blanket commitment, because I think that we can all imagine circumstances of individual privacy or commercial interests where that would not be appropriate.

Geraint Davies: My right hon. Friend will know that for a cost of about £50 million a year, the NAO and the Public Accounts Committee save billions of pounds of public money during a Parliament. Does he agree that the recent extension of their franchise to be the auditor of the Housing Corporation, English Heritage, the Environment Agency and other non-departmental bodies, and access to social landlords, the train operating companies and PFIs, for example, will enormously increase the savings by multi-million pound figures?
	Will my hon. Friend continue to have an open mind on further access to other bodies that have already been mentioned? Will he extend his thoughts also to international contributions that we make to various bodies to ensure that, through the help of the Comptroller and Auditor General, we can deliver value for money to the taxpayer?

Andrew Smith: My hon. Friend is undoubtedly right about the enormous savings made through proper scrutiny of public expenditure, and through the Government's acting on the recommendation of the Comptroller and Auditor General and the Public Accounts Committee. Contributions to international bodies are already scrutinised, but the accounts of the bodies themselves fall outwith the arrangements for domestic audit and accountability.
	Although, as my hon. Friend says, the proposals will involve the Comptroller and Auditor General in a good many additional responsibilities, he has made a clear commitment—as the proposals show—to contracting out a significant proportion of his work. Indeed, he has already done that.
	Where the audit is being taken over by the CAG, money to pay for it will be paid to him rather than to a private sector auditor. Any additional net costs should arise principally in relation to the external validation of public service agreement systems, rather than the rest of the CAG's audit and accountability.

Michael Fallon: Proper external validation of public service agreement targets will be a big step forward, but will the Chief Secretary say a little more about the new access to bodies involved in the private finance initiative? Will the CAG be able, for example, to investigate the increasingly opaque nature of some of the special-purpose vehicles that are being established for PFI schemes, and will he be able to comment on the extent to which some longer-term liabilities are now being kept off the public balance sheet?

Andrew Smith: Access for the CAG will depend on the status of the vehicle, company or organisation concerned. In general his rights of access follow the money, whether it be by grant or by contract. The big step forward that today's proposals represent is that whereas in the past the CAG has had to negotiate access or agree it by administrative means, which has not always been easy—there have been delays, and so on—he will now have a statutory right.

Adam Price: I too welcome the Chief Secretary's proposals, particularly the proposal to extend access to PFI contractors. Will that include access to documents pertaining to pre-contractual negotiations between Departments and preferred bidders appointed at the outline bidding stage? Concerns have been raised over why the final agreed contracted price for PFI projects is sometimes as much as two or three times that envisaged at the outline bidding stage.
	Does the Chief Secretary agree that that is a legitimate area of inquiry for the CAG, especially as preferred bidders have never been deselected, so effectively this is a single-tender process?

Andrew Smith: When documents, evaluations and so forth are relevant to the CAG's inquiries, whether as part of his normal audit work or as part of a value-for-money study, he will have access to them.

Brian Jenkins: As my right hon. Friend knows, the Audit Commission and the National Audit Office have areas of responsibility that abut one another and sometimes almost overlap. That causes difficulties with certain arrangements. When my hon. Friend the Member for Dumbarton (Mr. McFall) asked whether he and his Department had even considered the possibility of a merger, he said no. Why?

Andrew Smith: I was asked whether I had given the matter further consideration. That was the question to which I answered no.
	It is important for there to be effective collaboration between the respective bodies that are responsible for public audit. There is, in fact, a public audit forum. When my hon. Friend has a chance to read the proposals, he will see what steps are being taken to continue that work. I did not want to set hares running, and I do not want to do so now, by suggesting that such an amalgamation is on the agenda.

David Rendel: I am grateful to the Chief Secretary for his response and for his kind words about my small part in the Sharman steering committee. I welcome the Government's response, particularly because almost all the recommendations of the Public Accounts Committee have been adopted—better late than never.
	There are two outstanding matters. First, the Chief Secretary said that all non-departmental public bodies that currently exist and are not audited by the NAO will be audited by it when their contracts come up for renewal. Can he assure us that, at least under his Government when he still has responsibility, any new NDPBs that come into existence will be audited by the NAO?
	Secondly, the BBC is undoubtedly the one real weakness in the Government's response. People throughout the country pay tax of over £100 a year towards Government funding for the BBC. That is a huge sum and needs to come under parliamentary scrutiny. The important point about what the Chief Secretary said about editorial independence is that the NAO is Parliament's auditor, not the Government's auditor. We would all be worried about editorial independence if the auditor were to report directly to the Government. If it reports to Parliament, it reports to all the people of this country. Surely in those circumstances, there should not be a problem about editorial independence.

Andrew Smith: I thank the hon. Gentleman for his contribution to the Sharman steering committee. Any future NDPBs that are set up will be audited by the Comptroller and Auditor General. Should any of those be companies, amendments to legislation will ensure that he can audit companies—that is our clear intention.
	I have already dealt with the BBC. I take the opportunity to underline that the BBC is fully and properly audited. What is more, the Comptroller and Auditor General already has the opportunity to access the funding department in following the application of the licence fee.

Richard Bacon: The Chief Secretary said that he had already dealt with the BBC. Many hon. Members on both sides of the House may beg to differ. Concern and disappointment have been expressed from both sides about the fact that the Government have excluded the BBC from the remit of the NAO. The Chief Secretary's justification appears to be that it would be a "grave error" if even the impression were created that the BBC's editorial independence could be compromised. As the hon. Member for Newbury (Mr. Rendel) pointed out, it is hard to see how that could be the case when the NAO is itself independent of Government. Does the Chief Secretary recognise that he has not advanced a sufficient argument, and that he will therefore need to start to explain why anyone should begin to think that the independence of the BBC should be compromised by the fact that it was audited by the NAO?

Andrew Smith: The BBC has a special status, set down in its charter. As I said, there would have to be very careful thought before even the impression of any infringement of editorial independence were given. While I have absolute confidence in the independence and impartiality of the Comptroller and Auditor General and the National Audit Office, one does not need a great imagination to see how some of the issues that may arise may become the subject of quite heated political speculation and debate that could give the impression of editorial independence being put at risk.

William Cash: Does the Minister accept, with respect to the BBC, that in the public interest it is essential that full accountability be achieved? The answers that he has given have so far been, if not evasive, then somewhat lacking in clarity. Would he be good enough to ensure that he writes to me and indeed to the Chairman of the Public Accounts Committee to explain the reasoning behind the arguments that he has advanced? Many licence payers regard the amount of money that they have to pay as warranting proper analysis. Furthermore, it is a matter of great public importance. Can he give any other example of a chartered body that has the right to charge a licence fee and manages to avoid the full accountability that he seems to be avoiding at the moment with respect to the BBC?

Andrew Smith: The hon. Gentleman is one of those hon. Members with a special interest in this matter, and he asks whether I will write to him about it. Later on, I shall be the second Minister to make an appearance before the Public Accounts Committee. I am sure that there will be an opportunity to discuss these matters further. My answers will, of course, be on the record.

Points of Order

Mike Gapes: On a point of order, Mr. Speaker. I seek your advice. At the end of last week, I—and, I presume, all other Members of Parliament—received a letter from the police federations of Scotland, England, Wales and Northern Ireland about the meetings being held today. The letter said that the meeting with London Members of Parliament would be held at 4.30 this afternoon at the QEII centre. However, at Prime Minister's Question Time, the hon. Member for Uxbridge (Mr. Randall) alleged that Labour Members were not prepared to meet members of the Metropolitan police. I have checked with my office, and have found that we received an e-mail at 12.12 today to change the arrangements for some regional meetings. However, the e-mail listed no changes to the time and place of the London meeting. How can I place on the record a correction to the allegation made about Labour MPs?

Mr. Speaker: The hon. Gentleman has made not a bad job of putting that on the record.

Tam Dalyell: On a point of order, Mr. Speaker. I do not have chapter and verse details of the Scotland Act 1998 in front of me, but some of us endured many hours listening to Mr. Donald Dewar and Mr. Henry McLeish telling us how much consultation there would be between Edinburgh and London. My question to my right hon. Friend the Chief Secretary was very careful. I did not ask him to ask my hon. Friend the Paymaster General and my right hon. Friend the Financial Secretary to the Treasury to do anything, let alone to meddle. My question was different: I asked what conclusions and lessons could be drawn from a situation in which the giddy costs involved were escalating. Local authorities are becoming more and more skint because those costs come out of their finite budgets.
	Given that I asked that lessons be learned, and not that Ministers should do something, am I not entitled to ask that they at least take an interest in what has happened?

Mr. Speaker: The hon. Gentleman knows that I am not responsible for the Minister's reply.

Foreign Exchange Transactions Tax Commission

Richard Allan: I beg to move,
	That leave be given to bring in a Bill to establish a Commission to inquire into the feasibility of a foreign exchange transactions tax; to provide for the Commission's remit and duration; and for connected purposes.
	I was pleased to learn during the statement that a special purpose vehicle was part of the private finance initiative, and not a type of four-wheel drive vehicle, as I had thought.
	I shall begin by describing as straightforwardly as I can the benefits of a foreign exchange transactions tax, and then set out why I think that that would be very timely. The tax is commonly known as the Tobin tax, following proposals made in 1972 by the Nobel prize winning economist James Tobin, who promoted the idea of a small tax on foreign exchange transactions. He believed that the tax would help promote free trade, by assuring countries that they could open their markets without exposing themselves to disruptive movements of "hot money". Tobin did not, however, see that as an extreme move against free trade. In promoting this Bill, I am anxious that his original aim should not be forgotten.
	The aim of a Tobin tax is to provide a useful tool for stabilising currencies and much needed funds for international development to help free trade work fairly. It would be complex to establish the tax as, to be effective, it would require new means of international co-operation. That is why I propose that a commission be established in the first instance, to analyse the challenges of implementing such a novel tax regime. However, the current state of the financial markets means that a decision in principle by the UK would be highly significant in developing the proposals.
	At present, 84 per cent. of all foreign exchange transactions occur in just nine countries, of which the UK is one. An indication of willingness on the part of those nine countries to introduce the tax would take us most of the way to finding a workable solution. Our Chancellor of the Exchequer has shown himself open to the idea. In a speech to the Federal Reserve in New York, he declared his willingness to examine the practicalities of "innovative ways" to finance development, including currency taxes. In addition, our Prime Minister argued in his speech to the Labour Party conference that
	"our economy should not be run for speculators and currency dealers".
	I assure them that there would be widespread support in Parliament and among the general public if they really can place the UK at the forefront of international negotiations on the Tobin tax.
	In Parliament, 88 MPs have so far signed an early-day motion tabled by the hon. Member for North-East Derbyshire (Mr. Barnes) on this subject. Outside Parliament, organisations such as War on Want, Oxfam, Christian Aid, Save the Children and Unison have signed up to the Tobin tax declaration, along with 38 others.
	The tax would produce a win-win situation for the world's poor, so who would lose? More than $1 trillion changes hands every day on global foreign exchange markets. More than 80 per cent. of that trading is of a speculative nature—buying and selling money for profit's sake. Although such currency gambling has enabled some banks and investors to make multi-million dollar profits, it is not part of any genuine trade or investment. Instead, these volatile movements of capital destabilise entire economies, causing serious financial crises such as we have seen in south-east Asia, Latin America—most recently Argentina—and Russia, disproportionately affecting the most vulnerable in those societies.
	On some estimates, more than 10 million people lost their jobs in the first few months of the east Asian crisis in 1997-98. Millions more were caught up in the aftermath, pushed into poverty and debt, while Governments had to divert resources from social programmes into propping up their currencies. The ripples from these crises are felt around the world, giving us all a direct interest in resolving them in addition to our natural concern for the people of the affected countries.
	The Tobin tax, while helping to stabilise currency, would also generate funds that could be put towards international development programmes. A minimal tax of, say, 0.1 per cent. on currency transactions would not hold back productive business transactions for trade and investment but would hit speculative transactions. War on Want, which leads a campaign for the tax, estimates that taxing at that low rate could raise between $50 billion and $300 billion a year. That would more than cover the estimated cost by the United Nations development programme of $40 billion a year to eliminate the most extreme forms of poverty and to provide access to sanitation and basic education in all developing countries.
	I hope that the House will accept that such taxes merit further investigation by a commission, and that it would be very timely to do so for the following reasons. First, there is to be a major United Nations summit in Monterey, Mexico, next week on financing for development. The need for substantial increases in aid for developing countries has been recognised, but we are still a long way from finding the solutions.
	I commend the Chancellor of the Exchequer for his launch yesterday of a £10 million education fund for deprived nations, but that is against a background of the UK's continued failure to deliver the United Nations pledge to raise aid levels to 0.7 per cent. of gross national product. Any receipts from new taxes such as the Tobin tax should be in addition to the United Nations aid target and not seen as a substitute for it. I urge the Chancellor at the United Nations summit to commit the UK to reaching the 0.7 per cent. target and exploring additional new funding methods.
	Secondly, there is a growing movement in this country and internationally to introduce a Tobin tax. That has come together with a series of events today on what has been termed Tobin tax day. They include an expert seminar this afternoon, followed by a deputation to the Treasury to present a declaration ahead of the UN summit.
	This evening, Parliament will host a movie premiere as a new advertisement for the Tobin tax is shown in Portcullis House. If the music of Radiohead and the voice of Ewan McGregor are not enough to attract hon. Members to that event, they may be drawn by the knowledge that the advertisement has been deemed "banned". That follows a judgment that its content is too political for broadcast on television. However, the full uncensored version is available on the Tobin tax website, where no such restrictions apply, at www.tobintax.org.uk.
	On the international scene, a Bill to accept a foreign exchange transactions tax is today being passed by the Belgian Parliament. Belgium will join the French Parliament, which passed a law in November committing France to the introduction of the tax when other European Union countries have signed up to it, and the Canadian Parliament, which passed a motion in 1999 calling on its Government to promote the tax internationally.
	Thirdly, it is important to consider the international context, as we live in times of international insecurity. Much of our time is taken up with talk of conflict and in such a climate it is more important than ever to explore positive measures to enhance security through development rather than ever-increasing armament. I was brought up at a time when cold war rhetoric kept me living in permanent fear of nuclear annihilation. I do not want to see a new generation growing up in a state of permanent war, fearful that the anger of the dispossessed and desperate may break out into violence at any time.
	I was impressed by a speech made recently by US Congressman Dennis Kucinich, in which he set out an alternative vision. He said:
	"Let us pray that we have the courage to replace the images of death which haunt us, the layers of images of September 11 . . . Let us replace those images with the work of human relations, reaching out to people, helping our own citizens here at home, lifting the plight of the poor everywhere."
	We should not underestimate the harm that fear causes, especially to our young people, and we should be more determined than ever to demonstrate our willingness to find peaceful solutions to international instability wherever possible.
	Sadly, the introduction of my Bill has been made more topical by the death of James Tobin earlier this week. I quote a remark that struck me from one of his obituaries:
	"Mr. Tobin was one of those economic theorists whose influence reaches so far that many people who have never heard of him are nonetheless his disciples. He was also, however, a public figure, for a time the most prominent advocate of an ideology we might call free-market Keynesianism—a belief that markets are fine things, but that they work best if the government stands ready to limit their excesses."
	I feel very much in step with James Tobin's thinking. This Bill is not an anti-globalisation measure. There are widely contrasting views of globalisation at present. One view would have it as a force of neo-imperialism that will create a world in which the power of the strong to exploit the weak is entrenched so that the rich get richer and the poor ever poorer.
	Another view is that globalisation is a progressive force, leading to a world in which all people can exchange goods, services and culture on an equal basis, free from unnecessary and harmful barriers. That is where we should be putting our political energies. We should introduce measures to ensure that free trade really is fair trade; that development is sustainable and of benefit to ordinary people; and that markets work for mankind rather than mankind working for the markets.
	The Tobin tax would be a small but valuable part of that body of work. I urge the House to support the creation of a commission to take that work forward.

Bill Wiggin: I declare my registered interest in Commerzbank. Furthermore, since 1991 I have worked in foreign exchange markets.
	The Bill introduced by the hon. Member for Sheffield, Hallam (Mr. Allan) is probably the most naive and short-sighted proposal that I have heard since becoming a Member. It is the financial equivalent of the Campaign for Nuclear Disarmament, from a party that embraces the single currency above all else.
	The hon. Gentleman is right that the UK foreign exchange market is one of the largest in the world, transferring more than $1 trillion a day. However, that size is numerical and is used to advertise the advantages of doing business in the UK. It is a free market which, by its nature, is international. Owing to electronic transfer of funds, currency can be—and is—moved anywhere in the world.
	The success of the United Kingdom as a foreign exchange player is based on three criteria: the UK is a good, English-speaking place to do business; there is wise and gentle governance by the Bank of England; and there are no extra burdens of cost or taxation. The Government have many better things to do—for example, improving our public services—than trying to find a way of pushing more foreign exchange business away from Britain.
	The average margin on a foreign exchange deal would be less than 0.0001 of that currency—we call that a pip. The size of the profit means that only a huge amount of money would make it practical to continue doing such business.
	The proposal is ill thought out. Its acceptance is, of course, in the grant of the Government. It reflects the greedy nature of a Government seeking to increase taxation through stealth, and would in the end kill the goose that lays the golden eggs—the huge amounts of income tax and company tax levied on companies conducting foreign exchange business—for the sake of chasing a difficult market that is far more liquid and international than any tax collector. I hope that the House will reject the Bill.

Kelvin Hopkins: rose—

Mr. Speaker: Order. Only one Member is allowed to respond.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Richard Allan, Mr. Harry Barnes, Peter Bottomley, Dr. Jenny Tonge, Mr. Simon Thomas, Mr. Neil Gerrard, Tony Baldry, Ms Julia Drown, Mr. Paul Marsden, Angus Robertson and Andrew George.

Foreign Exchange Transactions Tax Commission

Mr. Richard Allan accordingly presented a Bill to establish a Commission to inquire into the feasibility of a foreign exchange transactions tax; to provide for the Commission's remit and duration; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 19 April, and to be printed [Bill 111].

Michael Fabricant: On a point of order, Mr. Speaker. You will be aware that the channel tunnel is still closed. I do not know whether you are aware that many jobs are at risk, not only those of the 6,000 or more people employed by English, Welsh and Scottish Railways, but those of people in my constituency and other parts of the west midlands who use the channel tunnel as the link to supply parts and equipment to the continent. The tunnel has now been closed to freight for several days, and there are still only 15 gendarmes and five security officers in Calais trying to protect the compound against several hundred illegal asylum seekers who are trying to enter the United Kingdom.
	I do not have to tell you, Mr. Speaker, while we are at it, that we are still failing to sell any beef to France. Given that the Prime Minister has said that we are now at the heart of Europe and that he has considerable influence with the French, I wonder whether he or anyone else has told you that—in addition to the very important statement on audit that we have heard today—he would like to make a statement on whether we can resume exports to the European Union through the channel tunnel.

Mr. Speaker: I have had no indication of such a statement being made.

Orders of the Day
	 — 
	Commonhold and Leasehold Reform Bill [Lords]
	 — 
	[2nd Allotted Day]

As amended in the Standing Committee, further considered.

Schedule 6
	 — 
	Premises excluded from right to manage

William Cash: I beg to move amendment No. 73, in page 100, line 6, leave out sub–paragraph (4).

Mr. Speaker: With this it will be convenient to discuss the following amendments: No. 74, in page 101, leave out lines 13 to 15.
	No. 84, in clause 74, page 35, line 30, after the "company", insert—
	'(4A) The regulations shall include provisions which shall insure that in the opinion of the appropriate national authority RTM companies shall have access to sufficient working capital to function effectively.'.
	No. 83, in clause 78, page 38, line 46, after "before", insert—
	'(2A) The delivery of a notice of invitation to participate by hand at or by recorded delivery to the flat held by the person required to be served under section 78(2) hereof shall be deemed to be good service on the day of such service.'.
	No. 72, in clause 87, page 43, line 37, leave out—
	'the claim notice is deemed to be withdrawn'
	and insert—
	'the tribunal may, on the application of any person specified in section 86(2)(a) above, make an order declaring the application to have ceased to have effect on such dates as may be specified by the tribunal.'.
	Government amendments Nos. 33A and 34.
	No. 71, in clause 105, page 54, line 12, at end insert—
	'(6) The tribunal shall have the power to appoint a new manager in the place of the RTM company if—
	(a) the RTM company wishes to withdraw; and
	(b) it is just and convenient to appoint a new manager.'.

William Cash: We certainly had lengthy proceedings on the first day of consideration, and I have no doubt that we shall have some interesting debates today, particularly later, on forfeiture. We also wish to raise several important matters in the debates on the proceeding amendments.
	Under amendment No. 73, we propose that certain provisions should be left out of paragraph 1(4) of schedule 6, which deals with premises excluded from the right to manage and buildings with substantial non-residential parts. That paragraph states:
	"For the purpose of determining the internal floor area of a building or of any part of a building, the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building or part shall be disregarded."
	We are concerned about that for the following reasons. As currently drafted, paragraph 1(4) appears to mean that, if a mezzanine floor has been built in part of a flat, it is deemed to run throughout the entire building. We simply do not agree that that is an appropriate assumption. In fact, anyone who visits my room in the House of Commons would find a similar situation. Paragraph 1(4) may be intended to provide that the area taken up by internal walls should be treated as floor area, but that is not its meaning as currently drafted. We suggest that a measurement code such as that used in the building societies legislation should be adopted in the Bill. That is a perfectly well understood way—and the more appropriate way—of dealing with the situation.
	Amendment No. 74 would also leave out certain words in schedule 6 with regard to premises owned by a local housing authority. The words in question are:
	"This Chapter"—
	which, as I said, is an important one relating to premises excluded from the right to manage—
	"does not apply to premises falling within section 72(1) if a local housing authority is the immediate landlord of any of the qualifying tenants of flats contained in the premises."
	We do not believe that there is any justification for disallowing local authority tenants from exercising the right to manage. Furthermore, in many cases, such tenants might feel that they, in particular, need to be able to exercise that right. The question is related to the issue of whether local authority tenants should be put in a different position from those of other tenancies. I think that the Minister has something to say, but perhaps she would prefer to wait until she makes her speech. There is a problem, but perhaps the Minister has a good answer, in which case I would be more than happy to hear it.

Sally Keeble: indicated assent

William Cash: The Minister nods. Therefore—in the hope that she will satisfy me on that question—I shall not need to take up a great deal of time.
	Amendment No. 84 relates to clause 74, on the right to manage, and deals with the question of regulations. Serious questions arise about the right to manage and the membership and regulations provisions. Those are in common form and will therefore be applied across the board. Many of those who will be affected will want to know that there will be proper and adequate backing for the running of so-called right-to-manage companies. Because the provisions will be in common form, it is even more important that there should not be any unfortunate mishaps arising from a failure to provide proper and adequate working capital.
	Our proposed new subsection states:
	"The regulations shall include provisions which shall insure"—
	it should be "ensure", but I do not suppose that we need to worry about that—
	"that in the opinion of the appropriate national authority RTM companies shall have access to sufficient working capital to function effectively."
	That is a reasonable position to adopt. It raises a matter that has been debated here and in another place. The problem is one of working capital. An RTM company will be a small business. Like any business, it will need working capital if it is to avoid insolvency. An RTM company only has one source of income—the service charge paid by the lessees, which is not a quick source of funding. Before a demand for service charges can be made, various statutory hoops must be jumped through. Inevitably, it takes time to raise money through a service charge.
	I am sure that we all agree that it is in the nature of building maintenance that money is sometimes needed urgently. When a roof starts leaking or an underground water main bursts, urgent and possibly expensive works may be necessary. We all have experience of that, and it usually happens at the most inconvenient time. Work is required urgently and, when the regular repair work is started, more repairs frequently come to light, so that the cost increases dramatically. We all know that, after the urgent repair work has started, builders have a way of discovering things that require attention. Builders require prompt payment—otherwise they will simply walk off site.
	An RTM company is likely to take over the management of a block after there has been widespread dissatisfaction with the existing landlord. In such cases, some tenants are likely to be withholding their service charge. That is normal and explains why it is necessary to have the right-to-manage arrangements. If there were no problems and everyone was always satisfied, there would be no need for such provisions. The first thing that the RTM company might need to do is bring leasehold valuation tribunal proceedings to extract the service charges due. The costs to the RTM company of such proceedings are irrecoverable, and that is another important ingredient in the practical approach to the problem.
	The problem with the Government's proposals is that RTM companies have absolutely no working capital, yet to meet perfectly ordinary and foreseeable obligations—we not only imagine but know that they will happen—the RTM company will need working capital. The Government propose that such companies should be limited by guarantee and we discussed some of the arguments relating to companies limited by guarantee when we debated commonhold.
	The members of a company limited by guarantee are unlike the shareholders of an ordinary limited company because they contribute no money up front to the company. I had an interesting discussion on that point with the Parliamentary Secretary, Lord Chancellor's Department, the hon. Member for North Swindon (Mr. Wills), because he is handling the Bill's commonhold provisions. I repeat for his benefit and that of the Under-Secretary of State for Transport, Local Government and the Regions, the hon. Member for Northampton, North (Ms Keeble), who is dealing with the Bill's leasehold provisions, that there is a real distinction between a company limited by guarantee and an ordinary limited company that has shareholders.

Michael Wills: That is not relevant.

William Cash: The Parliamentary Secretary says that that point is not relevant but it certainly is when determining whether a company has sufficient working capital for the urgent circumstances that I have described. As a matter of normal prudence, it should have enough money in the kitty to ensure that the inevitable repair bills and builders' costs can be met. The company should not have to call upon the money in an emergency fashion. Under the provisions for companies limited by guarantee, all the members of such a company give a guarantee to the company that, if the RTM company goes into liquidation, they will contribute the sum guaranteed to the company's liquidator.
	I understand the legal propositions behind the Government's proposals. I believe that that are extremely well advised and, like the rest of us, Ministers have practical experience. Most of us have flats, have lived in flats or have children who live in flats. I have described the practical questions that crop up and many Members of the House and huge numbers of the public have experience of companies limited by guarantee, but they do not necessarily examine the small print or appreciate that such companies are not like ordinary limited companies. Many people have taken part in activities related to companies limited by guarantee without realising that that is the state of play. We need to consider that problem because we are trying to improve the Bill and to reflect on the practical implications. We are not being difficult or awkward, but constructive. I hope that both Ministers appreciate that we are adhering to that line.

John Taylor: Unfortunately, I have lost the thread of the argument since we were in Committee because I was not here on Monday. Of course it is important to have working capital. That stands out a mile in the argument that my hon. Friend is making extremely well. However, where will people gain access to working capital? Will the banks be interested in helping out RTM companies, or will they need collateral to borrow? Perhaps my hon. Friend could develop that.

William Cash: Yes, indeed. My hon. Friend is greatly experienced in such matters. As a practising solicitor, he would have known about tenancies and the management of flats. I do not think I am breaking any confidence by revealing that as a tenant of a block of flats he took part in such deliberations.

John Taylor: It is in the Register of Members' Interests.

William Cash: It is even in the register.
	There is a market for banks and others who want the arrangements to work effectively to provide the working capital. However, they are not likely to do that unless there is an incentive. The money has to be made available. It will not be a huge sum, although it depends on the size of the flats. My hon. Friend's suggestion is important and we should consider the problem from a practical point of view.

John Taylor: Is it not an incentive for people with long leases on flats to acquire the freehold and invest in the RTM company, as the Bill will enable them to do, because that will allow them make a more serious approach to the bank to borrow money?

William Cash: Again, I am grateful to my hon. Friend and agree with him. Indeed, the RTM company could get borrowing power by borrowing against the guarantee given by each of its members. I regret, however, that the Government propose that a member should give the grand sum of £1, which makes the guarantee worthless. That needs serious consideration and the Minister should respond to it, because it raises practical problems.
	Various proposals have been made during our deliberations on the Bill, such as increasing the amount of the guarantee to a more realistic figure. The Government, for a reason that escapes me, have rejected every proposal on the basis that it would make an RTM company unattractive. I fail to understand that. It is in the interests of those who are engaged in RTM companies and in the general interests of making the Bill work that none of those problems exists. We do not want to render the operation unworkable or present hazards to the smooth running of the arrangements. It is not difficult to provide for or to determine a reasonable amount of money to be made available through working capital. That could be decided by regulation. I do not think it is beyond the wit of man to come up with such an arrangement, even at this stage, given that the power exists to provide for regulations. I hope that the Minister agrees that the opportunity remains for such an arrangement. That would show that she is responding constructively.
	The Opposition do not want RTM companies to be unattractive, but if they go belly-up because they have no working capital, they are likely to prove most unattractive. However, concrete proposals that we made at an earlier stage have been rejected. As the Minister knows, in general I am against giving Ministers the power to make regulations, but we need to be realistic at this point. Given that much of the detail of commonhold will now be included in regulations, they should deal properly with the need for working capital. The amendment, which is a useful and practical proposal, would oblige Ministers and the Welsh Assembly to consider seriously RTM companies' viability as commercial units.
	For a reason that I do not entirely understand, amendment No. 83 refers to clause 78. In fact, it should refer to clause 79, but I doubt whether that point will trouble the Minister, as it is the argument's substance that I intend to address. Clause 79 deals with notice of claim to acquire right and general provisions relating to the right to manage. Clause 79(1) states:
	"A claim to acquire the right to manage any premises is made by giving notice of the claim . . . and in this Chapter the 'relevant date', in relation to any claim to acquire the right to manage, means the date on which notice of the claim is given."
	Clause 79(2) states:
	"The claim notice may not be given unless each person required to be given a notice of invitation to participate has been given such a notice at least 14 days before."
	The amendment would deal with the issue of delivery by adding a new subsection (2A), and because delivery is important, it should be accepted.
	When the issue was considered in the other place, Lord Falconer of Thoroton acknowledged that my noble and learned Friend Lord Kingsland had identified a technical problem in respect of notices that need to be remedied. So shocked was Lord Kingsland at that admission that Lord Falconer felt it necessary to advise him to keep hold of his seat lest he should fall off it.
	The Government promised to introduce amendments to remedy the defect, but unfortunately they do not fully meet the point. The problem is a simple one. Perfectly sensibly, the Bill provides that, before an RTM company applies to take over management of a block, it should give notice to all long leaseholders in the block and invite them to become members of the company. Clause 78, which deals with notice inviting participation, sets out the various matters that must be included in such a notice. Subsection (7) states:
	"A notice of invitation to participate is not invalidated by any inaccuracy in any of the particulars required by or by virtue of this section."
	In other words, inaccuracies in the notice will not invalidate it.
	Such matters are not unimportant. We all receive bits of paper every day, and even if those relating to the running of one's premises are ostensibly not the biggest or most important bits they ever get, if the relevant bit does not reach the right person, the consequences could be hugely inconvenient, including the need to consult lawyers or managing agents. If someone has children, they might lose the notice—we all know how easily that can happen—or mix it up with invitations and other pieces of paper. It is important that the notices should be received, and we can all think of examples in which notices could go astray, so recorded delivery is obligatory.
	Clause 78(7) also provides that inaccuracies in the notice shall not invalidate the notice. So far, so good. The problem that Lord Kingsland identified, and which the Government said they would remedy, was the difficulty of ensuring that every qualifying tenant in a block was served with a notice of invitation to participate. A block might contain more than 100 flats—in Westminster, blocks often do—and it would be absurd if the failure to serve one of the tenants in the block resulted in the whole RTM procedure being treated as null and void. The Government seem to have accepted that point—at least, we hope so—but unfortunately the clause does not deal with that problem.
	Clause 111 makes some provisions about the service of notices—I see those whom we are not supposed to see taking a look at some of the provisions I mention—but it makes no provision for any form of deemed service. I hate deemed provisions but, in this case, they are justified.

Greg Knight: My hon. Friend is a powerful advocate and he has taken me with him so far, but I have some reservations about amendment No. 83. My concern is that it may be too draconian in practice. I shall give him an example that might lead to a miscarriage of justice. Many flats are served by a communal front door, with one letter box, where the mail for all of the flat occupants is delivered and the occupants collect it later. I know from experience that if a postman has a recorded delivery letter, he will ring the bell for every flat and asks whoever answers the door to sign for it. If the amendment is accepted, a situation could arise in which a recorded delivery letter is signed for at an address by one tenant on behalf of another. The latter could be away on holiday and know nothing about the contents of the envelope, but under the terms of the amendment he would be deemed to be served.

William Cash: That is an interesting intervention, but there are grave dangers in assuming that it would be lawful or desirable for people to accept recorded deliveries by signing on behalf of other people without authority. My hon. Friend is in interesting territory but his example does not present an insuperable obstacle to the points that I am making. The Minister may have something to say on that point and we might be able to address it in the arrangements for the service of notices. Perhaps the change could be made without using precisely the wording that we have chosen.
	As I was saying, if the RTM company fails to serve one tenant in a block of a hundred flats, that still leaves the question of the nullity of the claim notice. That follows from clause 79(2), which prohibits the service of a claim notice until all tenants have been served with a notice of invitation to participate. This is very much a drafting question. We are all aiming in the same direction because we all want the Bill to work properly, but if, to some extent, it does not, the general power to make statutory instruments may enable us to address some of these matters. Of course, I take careful note of the point made by my right hon. Friend the Member for East Yorkshire (Mr. Knight).
	The intention of the amendment is to make a simple deemed service provision. The RTM company can prove service either by hand-delivering a notice or by sending it by recorded delivery. In either case, a failure by some misadventure in service on a tenant will not invalidate the claim notice subsequently served by the RTM company on the landlord.
	Amendment No. 72 to clause 87 aims to defeat the mischief of deemed withdrawal provisions by deleting the imposition of a deemed withdrawal date and providing that an application can be made to a tribunal to end the original application in appropriate cases. In our experience and that of the Law Society, deemed withdrawal provisions do not protect tenants but serve only to frustrate otherwise valid claims.
	These matters have been carefully considered by the Law Society, which concludes that the provisions are akin to the automatic strike-out provision, which was part of the county court rules, order 15, rule 11, prior to the introduction of the civil procedure rules. It was abolished owing to the unnecessary hardship caused to claimants and the proliferation of satellite litigation as a result of its application. No doubt the Minister can take the matter into account when she replies.
	Amendment No. 71 deals with clause 105 on cessation of management. Subsection (1) states:
	"This section makes provision about the circumstances in which, after a RTM company has acquired the right to manage any premises, that right ceases to be exercisable by it."
	The clause then makes provisions about agreements and the circumstances in which the right to manage ceases to be exercisable, such as when a winding-up order is made, a receiver or manager is appointed, a voluntary arrangement is made or an RTM company's name is struck off the register. Subsection (4) says:
	"The right to manage the premises ceases to be exercisable . . . if a manager appointed under Part 2 of the 1987 Act to act in relation to the premises . . . begins so to act".
	The right to manage ceases to be exercisable also if the company ceases to be an RTM company in relation to the premises.
	The amendment would insert a new subsection which states that the valuation tribunal shall have the power to appoint a new manager in place of the RTM company if the RTM company wishes to withdraw and it is just and convenient to appoint a new manager. At the moment, there is no provision for the tribunal to appoint a new manager in those circumstances. The amendment seeks to close that loophole to secure the smooth, efficient and effective management of a property in the event that the RTM company no longer wishes to continue or to manage.
	Our amendments are practical. Some are very important indeed, particularly the one on working capital which, subject to the Minister's response, makes an unanswerable case for the making of arrangements to ensure against the RTM company being unable to deal with problems such as urgent works and things of that kind, which I described.

Sally Keeble: I shall deal with the points made by the hon. Member for Stone (Mr. Cash), although not in the order in which he made them, simply because my notes are organised otherwise.
	This group of amendments deals with various aspects of the right to manage. Many of them reflect the fears and concerns expressed in Committee by hon. Members, including the hon. Member for Stone, about the financial viability of the RTM company, the competence of its management and what happens if it fails. The right-to-manage provisions in the Bill will provide a robust framework for a new and important right, and will deal with many leasehold issues raised by hon. Members on both sides of the House. I shall now deal with each amendment in turn, including the Government amendments.
	Amendment No. 71 relates to clause 105 which, as the hon. Member for Stone said, sets out the circumstances in which an RTM company would lose the right to manage premises. As provided for in subsection (2), that may happen because the leaseholders no longer wish to carry on as managers. When that happens, they need to negotiate handover arrangements with the landlords, to whom the management would revert, before being able to withdraw. When they cannot agree such arrangements, or when no landlord can be found with whom to negotiate, the company can apply to a leasehold valuation tribunal for its own replacement as manager by virtue of schedule 7. As hon. Members know, individual leaseholders also have the right to apply to an LVT for the replacement of a manager if the RTM company is no longer functioning. I cannot understand the reasoning behind the amendment, as the LVT already has the power to appoint a new manager in the place of an RTM company.
	Amendment No. 72 provides that a landlord may apply to an LVT for a determination that the claim notice is withdrawn if the RTM company either fails to apply to an LVT to dispute the landlord's counter-notice or if the RTM company withdraws such an application. While I understand the intention behind the amendment, I do not accept that it would have any practical benefit. If the RTM company does not apply to an LVT to dispute the landlord's counter-notice within two months of such a notice being served, the claim notice is deemed to be withdrawn. While the amendment would give the landlord the right to apply to an LVT, the time limit of two months would still apply, and it is doubtful whether proceedings could be concluded in that time.
	Amendment No. 73 would have the effect of removing what is to be taken into account in calculating the floor area of a mixed use building. I wondered whether the hon. Member for Stone would propose a replacement for sub-paragraph (4) of schedule 6, rather than simply deleting it altogether. Paragraph 1 of Schedule 6, he explained at length, excludes properties that mix residential and non-residential uses, such as flats above shops, from the right to manage if more than 25 per cent of the internal floor space is in non-residential use. In making the necessary calculations, any parts, including garages, which are for the sole use of a particular residential tenant are counted as residential floor-space and any common parts are disregarded. Trying to determine what percentage of the common parts was residential and what percentage was commercial would prove difficult and, we fear, would be the subject of much contention. The complete removal of sub-paragraph (4), as the amendment provides, would result in uncertainty about which areas of the premises were to be included in the calculations. That would not be helpful. We believe that we have taken the correct approach in disregarding the common parts.
	I am not sure whether the hon. Gentleman is interested in the details of the 25 per cent. rule. If it would be helpful, I am happy to put it on the record for him.

William Cash: indicated assent

Sally Keeble: The 25 per cent. rule is based on the general rule that commercial floor space is broadly three times more valuable than the same amount of residential floor space. That means that a commercial unit that takes up 25 per cent. of the property accounts for roughly half the value of the whole property. Where, therefore, the commercial parts account for more than 25 per cent., it will be the landlord who holds the majority stake in the premises. Where that is the case, we would not be justified in allowing the leaseholders, as the minority interest, to take over the management of the block.
	That has been the subject of much debate both in this House and in the other place. We made clear our position on the 25 per cent. threshold during those debates. I hope that I have clarified the matter now, as we have not discussed this aspect at any other stage in our extensive discussion of the Bill.
	Amendment No. 74 would extend the right to manage to local authority tenants. The hon. Gentleman argued strongly for that. However, under various legislation, local authority tenants, including leaseholders, already enjoy a range of options for becoming involved in the management of their premises. Those options include a right to manage. We do not think it right that two rights to manage should be exercisable for the same property, as that would lead to conflict and confusion.

William Cash: I hear what the Minister says, and we know that many blocks of flats already have right-to-manage arrangements, but the Government say that we should have special, carefully tailored, leasehold right-to-manage arrangements, with all the memorandums and articles in common form, to achieve a degree of synergy and coherence. That, after all, lies at the heart of the Bill. Given the fact that the Government have given so much time and attention to the matter, and have produced the draft provisions so that we can consider them, and all the relevant regulations, why cannot they simply make the same arrangements for people who live in premises that are owned and run by local authorities? In other words, why should there be one rule for those who operate in the local authority context and others of a similar kind, and another rule provided for in the Bill? That does not make sense and will create great confusion.

Sally Keeble: It seems that the hon. Gentleman has not quite taken my point. Local authority tenants, who include leaseholders, as they have long leases rather than shorter ones, already have a range of options to assist in the running of their premises. That includes the right to manage. It is not helpful for people to have a right to manage under two different pieces of legislation. That would create confusion, as has already occurred in the discussion. As local authority tenants already have a right to manage, we do not intend through the Bill to provide them with a second right to manage. I hope that that makes it clear to the hon. Gentleman that we are not excluding local authority tenants; we are saying that a different route is available to them under different legislation.

William Cash: The Minister has not quite answered my question. Why should different legislation contain arrangements that are not coincidental with those in the Bill? I suspect that we are reaching a point at which we cannot agree, but an important question remains unresolved. Perhaps we will have to leave it at that.

Sally Keeble: I do not think that there is a big difference from existing measures: local authority tenants previously had a right to manage, so it could be said that other leaseholders are merely catching up. We are not ensuring that local authority tenants, including leaseholders, will not have a right to manage, because they had that right first. That is why it would be confusing—our discussion of the issue has been fairly confusing—if one group of leaseholders had two rights to manage, while another group had only one.

William Cash: I shall try once more. Let us take a practical example, bearing it in mind that the matter has been discussed extensively; indeed, it must have been debated about five times, so if the point has been missed, a lot of people in the other place and here have missed it on many occasions. As the Minister knows, we believe strongly that working capital will be needed, for reasons that I have explained and that she will no doubt deal with in a moment. However, in terms of a minimum amount of £1, why should provisions be introduced that put all the right-to-manage arrangements at some risk, while local authority right-to-manage arrangements are effectively subsidised by the local authority itself? She disagrees, but if the arrangements are vested in what is laid down by a given local authority, where will the working capital for them come from?

Sally Keeble: Perhaps it will help if I put the boot on the other foot. If we limited the local authority right to manage to the provisions in the Bill, we would disapply the existing rights of tenants, who would no longer be qualifying tenants in that way. A whole lot of local authority tenants would therefore lose their right to manage, which would be wrong, as it would narrow the whole ability that the right to manage confers.
	The hon. Gentleman asked about the source of working capital and what happens to local authority leaseholders. There are a number of issues in relation to charging policies, but the matter in question specifically concerns who has the right to manage. The reason why we are limiting the right to manage in the Bill to exclude local authority leaseholders is clear: as I said, local authority tenants, including leaseholders, already have such a right. I realise that we might seem to be refusing to give something to local authority leaseholders, but that is not the case, as they already have it. That is why we feel it better not to apply a narrow leaseholder-only right to local authority properties, when a broader right to manage exists in respect of them that includes tenants with shorter leases. However, I assure him that the Government will continue to consider closely how we can further encourage and facilitate the involvement of all local authority tenants in the management of their homes.
	Amendment No. 83, which was also tabled by the hon. Gentleman, deals with the delivery of notices. It would provide that if the RTM company delivers
	"a notice of invitation to participate by hand . . . or by recorded delivery",
	the notice will be deemed to have been served on that day. The amendment is unnecessary. Clause 111 provides that any notices under chapter 1 must be in writing and may be sent by post. Under the Interpretation Act 1978, service by post is effective as of the time that the letter is delivered in the ordinary post. Subsection (5) of the clause further provides that the notice may be given at the flat contained in the premises to which it refers. In other words, the issue is already covered by existing legislation and the amendment would confuse matters.
	Amendment No. 84 provides for regulations to include provisions to ensure that in the opinion of the national authority the right-to-manage company has sufficient working capital. We would assume and expect those to be the prescribed provisions adopted by the RTM company as its memorandum and articles. We are dubious about the purpose of the amendment and whether it would have the desired effect. It is difficult to see how such a provision could be incorporated in the regulations or the memorandum and articles or how the opinion of the national authority would be deemed to have been given in each particular case. Indeed, the national authority is not defined for such purposes.
	Those technical difficulties aside, I appreciate concerns that the leaseholders who take over the management of a property should have the necessary funds behind them to be able to do the job properly. We intend strongly to encourage them to do so, but that is a matter for guidance, not primary legislation. Leaseholders already have to pay for the management of the property and will therefore exercise the right to manage in the knowledge that they will have to meet the costs that they run up.

Adrian Sanders: Is the Minister saying that the guidance notes will precisely clarify how much working capital is required or the amount of working capital that is adequate? She seems to have conceded the principle of the amendment—that that is desirable—but is leaving it to the guidance.

Sally Keeble: I did not quite say that. I said that we would encourage leaseholders to make the necessary arrangements. They already pay for the management of their property, so they will not be going into the unknown. In deciding about exercising the right to manage, they will want to ensure that they have made proper arrangements for the maintenance of the building—after all, it is their money that is invested in it. We will encourage them to make proper provision, but expect them to make proper financial arrangements for the maintenance of their building. That judgment will be based on their knowledge of how much it costs to run the building.
	I turn to Government amendments Nos. 33A and 34. Amendment No. 33A tightens the existing provisions relating to approvals once the right to manage has been exercised. As hon. Members know, we never intended that the right-to-manage company should take on management functions under leases of commercial units in a block. The RTM company should not get involved in the relationship between commercial tenants and the landlord. Concerns have been expressed that it could be argued that the RTM company would have functions relating to approvals in relation to commercial tenancies under clauses 98 and 99. That could mean, for example, that a commercial tenant would have to get consent from both the landlord and the RTM company for permission to assign the lease. This technical amendment is intended to deliver our original objective and to ensure that the RTM company has functions that relate only to approvals for premises that are held under a long lease by a qualifying tenant.
	On amendment No. 34, it may assist hon. Members if I give a short explanation of the clause to which it relates. Clause 102 gives effect to schedule 7, which sets out how the relevant provisions of leasehold and associated law apply while the RTM company is responsible for the management of the premises. It is a lengthy schedule. For example, paragraph 2 makes section 4 of the Defective Premises Act 1972 binding on the RTM company. This has the practical effect of making the company responsible for ensuring that the property is kept in a sufficient state of repair for it not to represent a threat to public safety.
	Clause 102(2) gives the appropriate national authority the power to modify other enactments for the same purpose. The amendment will mean that the power can be used to modify other Acts that are made after the Bill receives Royal Assent. If this provision were not included, the rules of statutory interpretation would mean that it would be doubtful whether it could be used in these circumstances. Of course, any new Acts should be drafted to take account of RTM, but until it is established, it may not be factored into policy making. This is a technical amendment that makes it clear that the power in clause 102(2) applies to subsequent Acts of Parliament and that it applies to the provisions of the Bill. On that basis, I invite the hon. Gentleman to withdraw his amendments.

William Cash: I have listened with great interest to the Minister's arguments but, for a variety of reasons, not least of which is the fact that she has not answered the question on working capital to my satisfaction, I intend to divide the House.

Question put, That the amendment be made:—
	The House divided: Ayes 179, Noes 295.

Question accordingly negatived.

Clause 98
	 — 
	Functions relating to approvals

Amendment made: No. 33A, in page 50, line 5, at end insert—
	'; but nothing in this section or section 99 applies in relation to an approval concerning only a part of the premises consisting of a flat or other unit not held under a lease by a qualifying tenant.'.—[Ms Keeble.]

Clause 102
	 — 
	Statutory functions

Amendment made: No. 34, in page 52, line 18, after "leases" insert—
	'(including enactments contained in this Act or any Act passed after this Act)'.—[Ms Keeble.]

Clause 116
	 — 
	Qualifying leases

Amendment made: No. 35, in page 59, line 9, at end insert—
	'(2) In section 69(1)(b) of the 1993 Act (estate management schemes), for "by virtue of the amendments of that Chapter made by paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52)" substitute "in circumstances in which, but for section 116(1) of the Commonhold and Leasehold Reform Act 2002 and the repeal by that Act of paragraph 3 of Schedule 9 to the Housing Act 1996 (c. 52), they would have been entitled to acquire it by virtue of the amendments of that Chapter made by that paragraph".'.—[Ms Keeble.]

Clause 121
	 — 
	RTE companies

Sally Keeble: I beg to move amendment No. 36, in page 61, line 7, after "notice" insert "to the company".

Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 37 to 42.

Sally Keeble: These amendments are all consequential to the change to the valuation date for flats, as provided for in clause 125. As hon. Members may recall from previous debates, under existing law the valuation date for flats is the date on which the terms of acquisition are agreed or determined. The Bill would provide that, instead, the valuation date was the date on which the right- to-enfranchise company served its initial notice on the landlord. We have subsequently realised that that could have some unintended consequences and these amendments are designed to rectify them.
	First, under the proposals currently contained in the Bill, it could be argued that the price for the freehold should be based on the number of participants when the initial notice was served. That is plainly not what we had intended and amendment No. 41 makes it clear that, though the property should be valued as at the date of the initial notice, the valuation should be based on the number of participants at the point where the landlord and the RTE company actually exchange contracts.
	Of course, we also need to ensure that the landlord knows how many participants there are at that stage. When the initial notice is served, the landlord will be told how many leaseholders are participating at that point. Amendment No. 40 will ensure that the landlord is sent a copy of any participation notices given to the RTE company after that point. Amendments Nos. 36 to 39 are consequential. Amendments Nos. 37 and 38 specify the time by which assignees and personal representatives have to give notice to participate.
	Secondly, existing law provides that the landlord must be notified of any agreements between the nominee purchaser and non-participating leaseholders which provide for the disposal of a relevant interest in relation to the enfranchisement. Under existing law, the nominee purchaser must tell the landlord of any such agreements entered into between the serving of the section 13 notice and the valuation date.
	Amendment No. 42 makes a consequential amendment requiring the RTE company to notify the landlord of any such agreements entered into at any time before the exchange of contracts.
	I commend the amendments to the House.

William Cash: It is clear that the Government have concluded that adjustments need to be made to this part of the Bill. As I have said from the beginning, we are anxious to see improvements to the Bill.
	On amendment No. 36, the Minister perhaps got through the explanation a little speedily. That does not alter the fact that it is important that we put on the record exactly what its implications are. The clause in question is clause 121, which deals with the exercise of the right to collective enfranchisement.
	Under clause 120, the right is exercisable only by the RTE company. Therefore, it is important for us to know exactly what kind of company we are dealing with and to understand what the word "company" means in relation to amendment No. 36. What is this company?
	In the first place, a company is an RTE company in relation to premises if
	"(a) it is a private company limited by guarantee, and
	(b) its memorandum of association states that its object, or one of its objects, is the exercise of the right to collective enfranchisement with respect to the premises."
	New section 4B in clause 121 is to be inserted in the Leasehold Reform, Housing and Urban Development Act 1993, which the Minister did not explain. In the chapter, participating member, in relation to an RTE company,
	"means a person who is a member by virtue of subsection (1)(a) of this section".
	Subsection (1)(a) of the newly inserted section 4B, which is put after section 4 of the 1993 Act, states the persons who are entitled to be members of the company. Therefore, where we talk about giving a participation notice to the company, we are referring to the company limited by guarantee. Participating members are
	"qualifying tenants of flats contained in the premises".
	A participating member means a person who
	"(a) has given a participation notice before the date when the company gives a notice under section 13 or during the participation period, or
	(b) is a participating member by virtue of either of the following two subsections."
	That refers to section 13 of the 1993 Act. New Section 4B is being inserted by way of amendment.
	I have attempted to go through part of this by way of explanation and by reference to the provisions. I do not criticise the Minister—she has a job to do, which is to get on with the Government amendments—but it is necessary to try to put on the record what the amendments are doing in relation to existing legislation, which in this context is the 1993 Act. It is just a matter of context. In so far as she is right to explain simply what she believes it is necessary to explain in the Bill, I feel that it is my job to explain exactly what is happening in the context of the pre-existing legislation and how that is being amended.
	Amendment No. 37 again relates to clause 121. The amendment arises, for those who are interested in following these matters, in respect of page 61, line 14. In line 14, the Government propose—we are dealing again with the membership of RTE companies inserted in the 1993 Act—that
	"A member who is the assignee of a lease by virtue of which a participating member was a qualifying tenant of his flat is a participating member if, within the period of 28 days beginning with the date of the assignment, he gives a participation notice to the company."
	I understand that the Government want to improve the Bill, as do the Opposition. They now propose to leave out the words after "if" to the end of line 16, and to insert:
	"he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company)."
	That is the right approach, for the reasons that the Minister gave, but serious difficulties can be encountered when periods are specified. The
	"period beginning with the date of the assignment and ending 28 days later"
	is likely to be a fixed date. I do not think that there would be any difficulty with that, but the amendment goes on to state:
	"(or, if earlier, on the execution of a relevant conveyance to the company)".
	Many problems can arise with the alleged execution of relevant conveyances to companies, or with relevant conveyances of any type. It is by no means impossible that what was thought to be the execution of a relevant conveyance could turn out not to have taken place, or to have been performed incorrectly. I shall not press the point, but I am concerned about the uncertainty that can arise when such language is used.
	The Minister may ask what other words could be used. I suggest that the word "valid", or something along those lines, could be inserted before
	"execution of a relevant conveyance".
	These are drafting questions, related to last-minute Government amendments. The Bill has been through five processes, in the other place and in this House. It is incumbent on us to examine the wording carefully to ensure that everything is in order before the Bill gains Royal Assent.
	Government amendment No. 38 deals with clause 121(6), which at present states:
	"And if the personal representatives of a participating member are a member, they are a participating member if, at any time, they give a participation notice to the company."
	Such language may be necessary as a matter of law, but it is complex and convoluted. The amendment would insert, after the second "if",
	"they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company)."
	As I said earlier, there is sometimes uncertainty about whether a conveyance has been duly executed.

Greg Knight: If there are only two participating members and one dies, and if the survivor is a personal representative of the deceased, does my hon. Friend think that there is one participating member, or two?

William Cash: That question reminds me of the Schleswig-Holstein succession problem. It was said that only three people knew the answer to that, and that one was dead, one had forgotten, and one was mad. My hon. Friend can take his pick as to which description fits him, but it is certain that a participating member who is a personal representative will be able to perform his functions in relation to a dead person. We can assume that that person will have to be mad, or that he has forgotten. I hope that that answer helps my right hon. Friend as much as his question helped me.

John Taylor: Surely the situation is perfectly clear? The one who is mad would be represented by a receiver in a court of protection, and the one who is dead would be represented by his or her executor or personal representative. I do not see a problem with that.

William Cash: My hon. Friend is a solicitor, and has the advantage of much more experience of trusts and wills—although, of course, I had to pass the requisite papers on such matters in my examinations many years ago. If we continue this dialogue, my hon. Friend and I will not be forgotten, but one of us will go mad.

Greg Knight: I am troubled by my hon. Friend's earlier reference to the execution of a conveyance. I am not happy with the proposed wording. My hon. Friend will know that lawyers can have a conveyance executed, but can then hold it to the order of their client, until the time has come for completion. Does my hon. Friend agree that the amendment could be defective, as the words
	"execution of a relevant conveyance"
	may not mean what the Minister intends?

William Cash: The support of so many hon. Friends from the legal profession leaves me feeling like a wagon train surrounded by red indians. I know what the words "in escrow" mean, but the Minister must satisfy the House that the words proposed would be appropriate in all circumstances, as it is possible that the conveyance would be invalid. The serious point underlying the banter is that it is essential that all conveyances covered by the amendments are valid.
	Government amendment No. 39, would replace "a" with "the" in line 20, page 61. I shall not confuse the House by arguing about that substitution. I will now pass on rapidly to the next amendment, having noted that, for the benefit of those who read Hansard, we did not miss the fact that "the" has been substituted for "a" in the amendment.
	Government amendment No. 40 to clause 121 is much more substantial. The clause deals with RTE companies, entitlement to be members of the companies, the nature of their relationship to one another and the procedures that must be followed. The amendment states:
	"For the purposes of this section a participation notice given to the company during the period—
	(a) beginning with the date when the company gives a notice under section 13, and
	(b) ending immediately before a binding contract"—
	my hon. Friends, particularly my right hon. Friend the Member for East Yorkshire (Mr. Knight), will notice those important words—
	"is entered into in pursuance of the notice under section 13,
	is of no effect unless a copy of the participation notice has been given during that period to the person who (in accordance with section 9) is the reversioner in respect of the premises."
	One marvels at the knowledge of those who draft these Bills.
	The Minister seems uncertain as to whether I am referring to a clause that is covered by this group of amendments. I am talking about Government amendment No. 40 and, just in case she has not read it, it stands in her name on the amendment paper. I merely mention that in passing.
	The participation notice and the question of validity remain at the heart of the problems that we face.

John Taylor: Does not this amendment share some of the characteristics of the Brandt report—he may have written it but he undoubtedly had not read it?

William Cash: That also applies to the Maastricht treaty and a number of others. I am quite sure, Madam Deputy Speaker, that the last thing you want is for me to go down that route. I shall simply say very briefly that there was a certain famous Chancellor of the Exchequer—or perhaps it was Foreign Secretary—who seemed to claim with pride that he had not read it. At all events, one or other of them did not read it, and that is very unwise. I shall read the Bill and make sure that what the Government are doing goes on the record. I know that the Minister will not mind because she has been giving a very good truncated explanation of what is involved. For our part, we intend to explain just what is involved in this group of amendments.

Greg Knight: It is rather hard on my hon. Friend to have to perform part of the Minister's duties without being in receipt of her salary. What does my hon. Friend understand by "gives" in proposed subsection (a) of Government amendment No. 40? Does it mean when the company draws up and dates the notice or when the notice is served?

William Cash: I am intrigued by my right hon. Friend's point. Proposed subsection (a) refers to
	"beginning with the date when the company gives a notice under section 13".
	That suggests that it means the moment when there is a transmission of that notice. Whether that transmission under section 13 follows the drawing up of the notice, there can be no doubt—one can give something only after it has been in one's possession or it has been established that it exists. Therefore, it has to be after the date of transmission—notice would be impossible to give if it had not been drawn up. Therefore, "gives" is the right word in this context, and I congratulate the Government on getting that right.
	Government Amendment No. 41 takes us deep into the territory of schedule 8. Again, I congratulate the Government on improving the Bill on Report. They have come to the conclusion, after the Bill has been through the process about five times, that these words need to be changed. I am sure that they are right, but I still raise the point about a binding contract. I admit that I would not have wanted to raise that point but for the fact that what is or is not a binding contract is tied to validity and the date of notice is tied to whether or not there is a binding contract.
	Government amendment No. 41 refers to
	"persons who are participating members of the RTE company immediately before a binding contract is entered into in pursuance of the initial notice".
	Proposed paragraph (b) states:
	"for 'participating tenants, once' substitute 'those participating members, once'".
	The Government's intentions are clear. I am still concerned about whether a contract could be known to be binding. That raises serious problems about timing. Having said that, and assuming that the Government are as close as possible to getting it right, I think that we would be able to support that amendment.
	Government amendment No. 42 relates to clause 125, which deals with the separate questions—at least, so it seems to me—of purchase price and valuation date. The amendment proposes introducing a new subsection (2), which would be added to another amendment to the Leasehold Reform Housing and Urban Development Act 1993, which we have discussed on a number of other occasions. Clause 125 states:
	"In Schedule 6 to the 1993 Act (purchase price payable), for 'the valuation date' (in each place) substitute 'the relevant date'."
	The Government propose to add the words:
	"In section 18(1) of the 1993 Act (duty to disclose existence of agreements affecting premises etc.), for 'valuation date for the purposes of Schedule 6' substitute"—
	these are the most important words—
	"'time when a binding contract is entered into in pursuance of the initial notice'."
	Madam Deputy Speaker, I am sorry that it has taken me some time to go through the provisions, but I am sure that the House will appreciate not only that I have tried to put them in context but that I have complemented the Minister's short remarks by a more adequate explanation. I have also drawn attention to concerns about the validity of the contracts. Throughout this group, we can see that shining star—the question whether a contract is binding or whether a conveyance will take effect at a given point in time.
	I hope that my explanation of those important matters has not taken too much of the House's time. At least, the record will show exactly how the pieces fit into the jigsaw. We may be no wiser than the mad person who could not work out the Schleswig-Holstein succession, but at least some people will be able to make sense of the provisions that we have been discussing.

John Taylor: I congratulate my hon. Friend the Member for Stone (Mr. Cash) not merely on his forceful advocacy—to which my right hon. Friend the Member for East Yorkshire (Mr. Knight) has referred—but on his comprehension and lucidity. He gave a master class which was greatly appreciated by those of us who had the privilege of listening to him. I look forward to the day when he is indeed our Attorney-General. We shall look to him with confidence to resolve problems such as the Schleswig-Holstein question.
	I should declare an interest, since I am involved in the management committee of a splendid block of apartments in Solihull. We shall have to wrestle with problems such as those we are discussing. For reasons unknown to me, my fellow residents sometimes look to me for elucidation, so I shall give them all copies of Hansard and draw their attention to the speech made by my hon. Friend the Member for Stone. They will then understand the issues. If they make me their chairman—as is threatened—I shall have Hansard ready at all times to show them what our learned friend said today.
	It is not possible for me to leave the Schleswig-Holstein question as easily as my remarks may have suggested. Conservative Members will recognise in those three central characters the first three people to speak from the floor at any meeting of the 1922 Committee.
	I am especially interested in the parts of the Bill that relate to RTM and RTE companies. We live in an age where we are beset by acronyms. RTM and RTE are not particularly elegant, although I suppose that we shall learn to live with them; but this is the country of Milton and Shakespeare and we ought to be able to do slightly better than that. I am reminded of phrases such as "sustainable scenarios" that emerge from our planning departments.
	In the light of my current personal experience, it is entirely likely that in a well ordered and promising situation a series of long leaseholders would see their best interests served by the evolution of an RTM into an RTE. That would be a good thing. In my own case, I sincerely hope that we shall be able to acquire the freehold through the RTE mechanism. The management company will then have a serious asset. It will have a realistic balance sheet and a capital basis.
	That relates to our earlier discussions. Such management companies will need working capital and they will be in a much stronger position to acquire it if they have a freehold as collateral. As the value of the freehold will almost certainly increase, they will have an appreciating asset on their balance sheet.
	There is still the question of how to build a reasonable kitty in the early stages, although few right-to-manage companies will come into being—

Madam Deputy Speaker: Order. I am sure that the hon. Gentleman is aware that the scope of the amendments is narrow. He should address his remarks to those amendments.

John Taylor: I should actually find that extraordinarily difficult, Madam Deputy Speaker, because I rose to my feet with no particular intention of speaking to the amendments. My remarks are in almost terminal decline, so I thank the House for listening to me with such warmth and I thank you, Madam Deputy Speaker, for rebuking me with such courtesy.

Adrian Sanders: I hope to say in five minutes what the hon. Member for Stone (Mr. Cash) said in 28. I hope effectively to scrutinise the provisions rather than to "excrutinise" them.
	Amendment No. 36 is relatively simple. Such a wide discussion of such a straightforward amendment is a disrespect to this place. Amendments Nos. 37 to 41 are clarifications.
	Amendment No. 42 is the only provision that one might question. I do not fully understand why it was necessary to alter the wording and I hope that the Minister can clarify that point.
	We could have dealt with the other amendments in two minutes.

Greg Knight: Conservative Members will take no lessons from the Liberal Democrats on what is disrespectful to this place when the majority of their party were notable by their absence from our debates on Report. They deigned to appear only when the hon. Member for Torbay (Mr. Sanders) moved a new clause on Monday evening. He should look to his own party if he is concerned about disrespect to the Chamber.

William Cash: In view of the somewhat surprising and intemperate remarks of the hon. Member for Torbay (Mr. Sanders), my right hon. Friend may remember that one morning in Committee, at only 10.30, I had to ask a question about the fact that the hon. Gentleman was fast asleep—

Madam Deputy Speaker: Order. I remind hon. Members that we are discussing specific amendments.

Greg Knight: I do not complain when the hon. Member for Torbay is asleep—that may be the time when he makes the most sense.
	I was a little hard on the Minister in an earlier intervention. In general, she has handled the Bill well, but her brevity on this group of amendments was unfortunate and has given rise to concern from Conservative Members. So I hope that when she replies to the debate she will answer fully the concerns that we have expressed.
	I do not follow my hon. Friend's concern about the words "binding contract", but I am concerned about amendment No. 38, which uses the words
	"execution of a relevant conveyance to the company",
	for the reasons that I gave in an earlier intervention. What does that phrase mean? When is the relevant conveyance actually executed? In the normal meaning of that phrase, the conveyance is executed when it is signed by the parties to it, but as lawyers will know, the conveyance itself may be held back until a later date before it is deemed to become effective. So I hope that the Minister can assure the House that she is confident that that phraseology will not lead to numerous court cases in future, with people questioning precisely what it means.

John Taylor: I believe that my right hon. Friend still holds a current certificate to practise as a solicitor. I should tell the House that I went straight many years ago and have given up practising the law, so I may be a bit out of date. Would he care to tell me whether it is still necessary, under English land law, for a conveyancing deed to be signed, sealed and delivered?

Greg Knight: My hon. Friend is right to say that I am a practising lawyer. I still hold a practising certificate, but this area of law is not my speciality, so I hesitate to give advice to the House that may be incorrect. However, I am sufficiently concerned to raise this issue with the Minister. A better form of words could be found, and I hope that she will respond to that point.

Sally Keeble: On Monday evening, one of your colleagues, Madam Deputy Speaker, said that the hon. Member for Stone (Mr. Cash) had got on to a loop line. This time he has got on to a circle line and gone around it several times, and the hon. Member for Solihull (Mr. Taylor) was on it with him for a short time, until he seemed to leap off in mid-flow. I say that because these are technical amendments, which deal with a change to the 1993 Act in relation to the valuation date. I hope to go through all the details.

William Cash: I wish to indicate the sort of concerns that we have by referring to the famous story of Catherine the Great writing to Voltaire. Voltaire wrote a clever constitution—very complicated stuff—and she wrote to him saying, "Monsieur Voltaire, you write exquisitely"—indeed, this Bill is written exquisitely—"but I have to write upon the human skin, which is mighty ticklish."

Sally Keeble: Well, I think that we just went around the circle line again, without making much progress, and the hon. Member for Torbay (Mr. Sanders) made some very fair points about that.
	These technical amendments are purely designed to ensure that the Bill operates as intended. As I said, they are consequential to the change in the valuation date. I shall deal with the most serious point first. Amendment No. 42 will require the RTE company to notify the landlord of any such agreements entered into before the exchange of contracts, so it relates to the change in the valuation date. I hope that deals with that.
	Apart from reading out different parts of the Bill at great length, the hon. Member for Stone asked what a participating member was and read out various explanations of that term. Of course, it is particularly important to ensure that the landlord knows how many participants there are. That is part of the intention behind many of these amendments, and he will see that that is exactly the case if he looks through them.
	The nub of the hon. Gentleman's concern—he made exactly the same point in Committee—goes to the heart of this group of amendments. His real argument is about the valuation date. He argued previously that the valuation date should be the date of the landlord's counter-notice, whereas something quite different is argued in these proposals. Our concern about his suggestion is that, in fact, many landlords have chosen to spin out proceedings as much possible with a view to persuading leaseholders to give up the enterprise altogether—a bit like the way in which the hon. Gentleman has spun out the proceedings in debating these amendments.
	I am not sure whether the hon. Gentleman hopes that the Government would give up these amendments completely, but we have no intention of doing so, because the Bill provides that the valuation date is fixed as the date of the initial notice, to ensure that the landlord will be encouraged to proceed with all speed and, as a consequence, that any movement in the market in the intervening period will not be material. All these amendments are consequential to that and are intended to produce more orderly arrangements. These purely technical amendments are consequent on something that we have already dealt with.
	Amendment agreed to.
	Amendments made: No. 37, in page 61, line 14, leave out from "if" to end of line 16 and insert—
	'he has given a participation notice to the company within the period beginning with the date of the assignment and ending 28 days later (or, if earlier, on the execution of a relevant conveyance to the company).'.
	No. 38, in page 61, line 18, leave out from "if" to end of line 19 and insert—
	'they have given a participation notice to the company at any time (before the execution of a relevant conveyance to the company).'.
	No. 39, in page 61, line 20, leave out second "a" and insert "the".
	No. 40, in page 61, line 22, at end insert—
	'(7A) For the purposes of this section a participation notice given to the company during the period—
	(a) beginning with the date when the company gives a notice under section 13, and
	(b) ending immediately before a binding contract is entered into in pursuance of the notice under section 13,
	is of no effect unless a copy of the participation notice has been given during that period to the person who (in accordance with section 9) is the reversioner in respect of the premises.'.—[Ms Keeble.]

Schedule 8
	 — 
	Enfranchisement by company: amendments

Amendment made: No. 41, in page 115, line 7, leave out from "tenants" to end of line 8 and insert—
	', as" substitute "persons who are participating members of the RTE company immediately before a binding contract is entered into in pursuance of the initial notice, as", and
	(b) for "participating tenants, once" substitute "those participating members, once".'.—[Ms Keeble.]

Clause 125
	 — 
	Valuation date

Amendment made: No. 42, in page 63, line 31, at end insert—
	'(2) In section 18(1) of the 1993 Act (duty to disclose existence of agreements affecting premises etc.), for "valuation date for the purposes of Schedule 6" substitute "time when a binding contract is entered into in pursuance of the initial notice".'.—[Ms Keeble.]

Clause 127
	 — 
	Disregard of marriage value in case of very long leases

Amendment made: No. 43, in page 64, line 4, leave out from first "of" to end of line 6 and insert—
	'the lease held by any of those participating members exceeds eighty years, any increase in the value of the freehold or any intermediate leasehold interest in the specified premises which is attributable to his potential ability to have a new lease granted to him as mentioned in sub-paragraph (2)(a) is to be ignored.".'.—[Ms Keeble.]

William Cash: On a point of order, Madam Deputy Speaker. I wonder where amendment No. 43 came from?

Madam Deputy Speaker: It was debated on Monday.

Clause 131
	 — 
	Personal representatives

Sally Keeble: I beg to move amendment No. 44, in page 65, line 2, leave out "one year" and insert "two years".

Madam Deputy Speaker: With this it will be convenient to discuss Government amendment No. 45.

Sally Keeble: These amendments will extend the period in which personal representatives can exercise their rights. Instead of the arguments that we heard in the previous debate, which neither helped to elucidate the law nor proposed any changes, I hope that we shall hear some cogent arguments from Labour Members on these amendments, which were tabled in response to the very persuasive arguments made in Committee by my hon. Friend the Member for Cleethorpes (Shona McIsaac).
	It might be helpful to begin with a little background to amendment No. 44, which relates to the right to new longer leases for flats. Under existing law, when leaseholders die, their personal representatives can be left in a difficult position. Their inheritance may consist of a lease that is too short to sell easily, and the freeholder may insist that they pay over the odds for an extended lease. The Bill provides that, when the deceased leaseholder would have qualified for the right to a new longer lease, that right will pass to the personal representatives, but that they will have to exercise that right within a year of the grant of probate or letters of administration. The amendment will extend that period to two years.
	Arguments have been made previously for a longer extension, but it is worth noting that, after holding the lease for two years, the personal representatives will qualify for the right to a new longer lease in the normal way, and, for the information of the hon. Member for Stone (Mr. Cash), clauses 129, 137 and 138 will apply. Personal representatives will no longer need to rely on the special rights granted to them.
	Amendment No. 45 makes an equivalent change to clause 141, which pertains to the right to a lease extension and the right to enfranchise as it relates to personal representatives of leaseholders of a house.
	I commend the amendments to the House. They will make a welcome addition to the rights of leaseholders and their personal representatives.

William Cash: I am extremely glad that the amendments have been tabled. I well remember that the matter was thoroughly considered in Committee, and the reasoning behind the amendments has been explained by the Minister. The hon. Member for Cleethorpes (Shona McIsaac) has made a useful contribution to these changes, and it would also be fair to say that the Committee as a whole greatly benefited from the suggestions that were made.
	I think that I am right that, in Committee, the question was whether we should leave out "one year" and insert "five years". There was a good deal of discussion about that, and I find in the Official Report of Standing Committee D that I referred to the Committee making progress. I added:
	"I agree with the hon. Member for Cleethorpes and I also agree with my hon. Friend the Member for Leominster about making the period too long. Will the Minister consider the possible bar in the mechanics of the provision of information by the freeholder?"
	I then made a point that I have made many times:
	"All hon. Members have an interest in ensuring that these proposals work . . . as we proceed, we think of ways to make the Bill more workable. That is in the interests of leaseholders and freeholders. I have no doubt that huge numbers of leaseholders will benefit from provisions of this sort in the interim period".
	Indeed, the hon. Member for Torbay (Mr. Sanders) said:
	"The Minister has proposed a happy compromise, which we shall support on Report, but I wonder why it had not been thought through beforehand. If one can enfranchise after two years' residence, why make the period one year in the case of inheritance?"
	He then congratulated the hon. Member for Cleethorpes on
	"prompting the Government in that direction".—[Official Report, Standing Committee D, 22 January 2002; c. 141.]
	The hon. Member for Cleethorpes then withdrew her amendment, although she does not have to do so on this occasion, as a Government amendment has been tabled. That demonstrates the wonderful alchemy of the Government and their Back Benchers—they can turn one year into two years, and it turns into gold.
	I strongly commend the Government amendment. Matters have been explained at length in Committee, and perhaps the hon. Member for Cleethorpes will want to make a few remarks. It is extraordinary how such a small amendment—changing "one year" to "two years"—might have a considerable effect in the circumstances. I therefore congratulate the hon. Member for Cleethorpes—and the Government on listening to what she had to say—and other members of the Committee who tried to make a small contribution at not too great a length.

Shona McIsaac: With such an invitation, I cannot resist taking part in this debate. I welcome the Government amendment. The hon. Member for Stone (Mr. Cash) is right that I focused on the issue a great deal in Committee, although I shall not go into it at such length today.
	I started lobbying on the matter back in July 2000. That gives the hon. Member for Stone some idea of how long it has taken to get to this stage. In July 2000, I was given leave to introduce a Bill on leasehold reform under the ten-minute rule. At that time, I focused on inheritance problems. I found that far too many residents in my constituency were very badly affected by the inadequacies of the law on inheritance.
	Many of the people concerned were elderly, and although they knew that they were in leasehold properties, the cost of enfranchising meant that they did not proceed with buying the freehold. Others did not even realise that their houses were leasehold properties. Sometimes, people who had grown up in a property found when their parents passed away that their parents had not owned the house, as most of us would assume if they had paid off a mortgage. Because their parents were tenants, those families could not buy the freehold. Some families therefore found out that they were likely to lose their family homes.

John Taylor: The hon. Lady vividly describes the kind of problems faced by some of her constituents. Does she agree that those problems are compounded by the absence from the Bill of a valuation formula demonstrating to the leaseholder what he must pay for the freehold?

Shona McIsaac: I thank the hon. Gentleman. We discussed that issue in Committee, and he may recall that my hon. Friend the Minister said that in the near future—I think that she referred to a period of six months—she would consider consultation on information that would have to be provided to the enfranchising leaseholder. I hope that the hon. Gentleman recalls that.

John Taylor: I recall it but I am not holding my breath.

Shona McIsaac: I thank the hon. Gentleman for that.
	In reference to family members, the Bill uses the dry wording of "personal representatives". However, we are talking about family homes and the emotions that families go through when somebody passes away. A period of one year in which grieving families could choose to enfranchise—I accept that one year was a significant move forward anyway, as that right did not exist previously—was far too short. Families must deal with their grief, and there would have to be discussion among family members on whether they wished to purchase the freehold of the deceased parent's property and then they would have to raise the money to do so. That one-year period was out of kilter with the other arrangements, and I welcome the introduction of consistency.
	The change will make a phenomenal and significant difference to many residents in my constituency, particularly elderly people, who, because of the publicity that has been given to these debates and to the Bill, have realised that without such a change their homes might have been lost. I know that many of them will be reassured by the measure, and I thank my hon. Friend the Minister for tabling this Government amendment.
	I realise that in Committee I suggested a period of five years, but that was an old trade union negotiating technique. I started at five years hoping that I would get two.

Don Foster: Lest it be thought that there is not all-party unanimity in our admiration for the work of the hon. Member for Cleethorpes (Shona McIsaac) on this issue, I too pay tribute to her long-standing efforts to sort out the matter. During the passage of the Homelessness Act 2000, when I was successful in persuading the Government to change their mind on some key issues, the Committee awarded me the privilege of sending a postcard home. I suspect that she merits a similar award.
	Although the hon. Lady did not refer to the point in detail, it is important that there is a degree of symmetry in a Bill. One of the amendment's merits—over and above the human ones that she mentioned—is that it provides the symmetry that was lacking in the Bill's earlier versions. She was right to push the issue for a number of reasons, so on behalf of the Liberal Democrats I express my delight at her success in persuading, with the support of colleagues on both sides of the House, the Government to table such a sensible amendment.

Bill Wiggin: My hon. Friend the Member for Stone (Mr. Cash) referred to me earlier, so I shall explain why I spoke on this sensitive subject in Committee. As will be made repeatedly clear in our debates, there were two reasons for the original design of leaseholds. First, they were designed so that a leasehold house might be sold in a similar fashion to a freehold. The second reason was to enable the house to return to the freeholder after a short period—but more than 21 years.
	It has been a tremendous achievement of the Committee and of the hon. Member for Cleethorpes (Shona McIsaac) to have incorporated this two-year period in the Bill. It takes at least two years to proceed through the legal minefield, so the amendment is sensible and compassionate. It will become clear later that some leases were put together with the idea that they should return to the freeholder. However, a two-year period is very reasonable under the circumstances. I congratulate the hon. Lady.
	The hon. Lady also said that there might be consultation in about six months, but that period may quickly disappear. I hope that the Minister will review the formula that my hon. Friend the Member for Solihull (Mr. Taylor) mentioned, although I noticed a little frown sneak across her face when he raised the issue. I look forward to reassurance from the Minister so that we can count down to the time when the formula will be reviewed.

Sally Keeble: Members on both sides of the House have recognised the work of my hon. Friend the Member for Cleethorpes (Shona McIsaac) in securing this amendment. The whole House recognises her long track record on campaigning on the leasehold issues affecting her constituents. We shall later debate other provisions that she has played a large part in securing. She has performed a real service to her constituents. We all know—she has often told us—that many of them are elderly people who live in leasehold houses. The points that she made about personal representatives and the interests of family members are very profound and real.
	I want to clarify a point about the provision of information on the valuation basis. I have a feeling that the hon. Member for Solihull (Mr. Taylor) was talking about the formulaic assessment of the valuation that he has often mentioned, so I should clarify the remarks that I made in Committee. Under the Leasehold Reform Act 1967, we already have powers to prescribe the form and content of the landlord counter-notice, and we will consult on proposals to require information about the basis on which the landlord's counter-offer has been calculated. That will form part of our consultation on the secondary legislation that will implement the Bill. We have to consult on several issues in order to take the Bill forward. However, I note that the hon. Member for Solihull has not held his breath; he is no longer in his place.
	Amendment agreed to.

Clause 140
	 — 
	Tenancies not at low rent

William Cash: I beg to move amendment No. 88, in page 68, line 1, at end insert—
	'(a) after paragraph (a) insert—
	"(aa) the tenancy was granted for a term of years not exceeding 80 years".'.

Madam Deputy Speaker: With this it will be convenient to discuss amendment No. 62, in clause 142, page 68, line 37, at end insert—
	'(1A) Nothing in the omission from section 16 of the 1967 Act provided for by subsection (1)(a) above shall prejudice the operation of any provision of a private Act by which an interest in property vested in a body for the benefit of the public may not be sold, leased, granted or otherwise disposed of otherwise than in accordance with that private Act.'.

William Cash: Amendment No. 88 is in my name and that of my hon. Friend the Member for Cotswold (Mr. Clifton-Brown), who has raised an important constituency issue that arises out of the Bill.
	Amendment No. 62 was tabled by the hon. Member for Wimbledon (Roger Casale). Although it is interesting, I am not sure how it connects with amendment No. 88. I shall be interested in the hon. Gentleman's explanation, not least because I am curious to learn what type of private Acts the amendment refers to. He may reveal interesting facts about how the private Acts that he has in mind will operate.
	I return to the gravamen that led my hon. Friend the Member for Cotswold to seek to amend the Bill. For a variety of reasons, it is a racing certainty that my hon. Friend will not be able to return to the House to deal with this issue, but I can do just that for him. His constituent Mr. Mason lives in Adlestrop in Moreton-in-Marsh, a place that I know well. As chairman of the Adlestrop residents' association, Mr. Mason has set out with great clarity his concerns about enfranchisement, which, as he says,
	"are not currently addressed by the Bill."
	The Minister may already have been in correspondence with Mr. Mason and, if she has, she will be thoroughly briefed on how to reply to the arguments of the Adlestrop residents' association, which I shall now set out. It is an interesting feature of the landscape of our parliamentary proceedings that we have an opportunity to focus on a problem that would otherwise be swept aside in ministerial correspondence.
	Mr. Mason says in his letter to my hon. Friend:
	"As you know, Adlestrop is a small village with some 70 adult inhabitants and is somewhat unusual in that it comprises a number of long leasehold properties. The freeholder of these properties is the Trustees of the Adlestrop Settlement. Apart from one freehold property, the remaining properties in the village are owned by the Adlestrop Trustees and are let on short term tenancies at an open market rent."
	There are currently 18 long leasehold properties and an almost identical number of properties that are let on short-term tenancies. The letter continues:
	"The 18 long leasehold properties fall into three different categories . . . There are properties where leases contain a Prince of Wales Clause and which qualify for enfranchisement under the 1993 Act."
	In light of that, perhaps we should consider whether the consent of the Prince of Wales or the Duchy of Lancaster should be signified to the proposal. However, such a technical question would only tickle the fancy of legal advisers.
	Mr. Mason then says:
	"There are properties where leases were not at a low rent but which now qualify for enfranchisement as a result of the Housing Act 1996 . . . There are properties where leases are not at a low rent but which will not qualify for enfranchisement under the 1996 Act on account of the fact that the freehold of the property 'is owned together with adjoining land which is not occupied for residential purposes.' These properties would be enfranchiseable but for the exclusion of certain properties in rural areas contained in Section 1AA(3) Leasehold Reform Act 1967, which was of course introduced by the 1996 Act.
	The pattern that was followed in Adlestrop is that long leases were granted on a number of properties in the early 1970s at a rent which was not a low rent. Subsequently, during the period between the mid 1970s and the late 1980s, leases appear to have been granted with Prince of Wales Clauses."

Bill Wiggin: Will my hon. Friend briefly explain what a Prince of Wales clause is?

William Cash: The Minister may be able to help, because I am not sure. As I understand it, a Prince of Wales clause is a special provision in Acts to save the rights, properties, privileges and liabilities of the Prince of Wales. [Interruption.] Would the Minister be good enough to repeat what she has just said from a sedentary position? Obviously not, and in the absence of my hon. Friend the Member for Cotswold, I am afraid that I can only take a stab at it. Perhaps we can elucidate such matters in due course.
	The letter goes on to say:
	"Subsequently, from 1990 onwards leases have been granted with a formula which ensures that the lease is not at a low rent. I can let you have copies of leases for each category . . . The leases were granted at terms in excess of 99 years and in most cases were for a term of 120 years or more.
	In each case the properties were sold at a premium by the trustees. The only reason for the sale of the properties on long leases, rather than by way of the sale of the freehold, was to enable the freeholder to retain control over the development, character and amenity of the village. There is no prospect that the freeholder will wish to resume possession of any of the properties on expiry of the leases. In each case a substantial premium was paid on the grant of the lease which would have been broadly equivalent to the price on the sale of the freehold (reflecting the length of the lease). In layman's parlance, the properties were effectively sold. In most cases, the properties were in very bad repair or involved the sale of a building plot which was subsequently developed by the lessee. The lessees have therefore expended considerable sums on the properties.
	The control of the development, character and amenity of the village can of course be met equally through an Estate Management Scheme. An Estate Management Scheme was introduced in 1998 in anticipation of the eventual enfranchisement of a number of properties within the village."
	There are many estate management schemes for rural estates. It is by no means improbable that the problems faced by Adlestrop are also shared by others who live on estates that are owned by individual freeholders. It is surprising how many villages are in that situation and have properties that are let on the basis of similar arrangements which give rise to the problems that I have described. Unless the Minister has evidence to the contrary, I do not think that Adlestrop is an isolated case and, as my argument has a general application, I hope that I can help to elucidate some of the problems.
	The residents' association continues:
	"To date, only one property has been enfranchised. In that case enfranchisement took place by agreement between the parties outside the Act and prior to implementation of the Estate Management Scheme. The lack of enfranchisement reflects the fact that, where properties are enfranchiseable, lessees have been awaiting clarification of the marriage value issue"
	which Mr. Mason hopes will be resolved by the Bill. The letter says:
	"In other cases, properties are not enfranchiseable.
	The problems of Adlestrop were the subject of the debate in the House of Lords prior to enactment of the 1996 Act which resulted in introduction of the rural exemption provision. I understand that this was intended to avoid enfranchisement of country properties which had been let for more than 21 years at a rent in excess of the low rent and where it was clearly anticipated that the freeholder may wish to regain possession of the property on the expiry of the lease. This is not a situation which is applicable to Adlestrop, but unfortunately the rural exemption extends to all leases over 35 years which are not at a low rent in designated rural areas."
	So the problems that Adlestrop faces are applicable elsewhere.
	The letter continues:
	"I understand that rural areas have been designated by the Secretary of State and which include Adlestrop.
	The end result so far as Adlestrop is concerned is that some properties are enfranchiseable whereas others are not."
	Mr. Mason then says:
	"You will be aware that the nature of the properties does not justify such a distinction."

Shona McIsaac: I am interested in what the hon. Gentleman says. At the eighth sitting of the Committee, I introduced new clause 13, which dealt with rural exemption. The Minister responded by saying that there is some sympathy with the desire to create a level playing field, but that she would need to consult first. Perhaps the hon. Gentleman can convey that to the hon. Member for Cotswold (Mr. Clifton-Brown).

William Cash: In a vicarious fashion, and given the charm of the hon. Lady's intervention, I am glad to endorse her comment. It is clear that there is a problem which the Minister may be prepared to address.
	There is, however, a further difficulty in relation to Adlestrop:
	"in the case of some of the properties which are not at a low rent, the application of the test as to whether the freehold of the property 'is owned together with adjoining land which is not occupied for residential purposes' is not clear. Consequently, it is not clear whether such properties are or are not excluded under section 1AA(3). This reflects the nature of the village and its properties."
	My hon. Friend the Member for Cotswold apparently met Mr. Mason and the then Minister with responsibility for such matters—the right hon. Member for Greenwich and Woolwich (Mr. Raynsford)—on 31 January 2001 to discuss the Adlestrop problem. Indeed, the Minister was also present at that meeting, so—unlike me—she is very familiar with the problem. It is in the nature of our affairs that we take a special interest in matters affecting our own constituencies. Had my hon. Friend been able to attend today's debate, I could have asked him exactly what went on at that meeting.
	According to Mr. Mason's letter, he suggested at that meeting
	"that a distinction should be drawn between properties which had been sold, albeit on long leases, and those which had been let on a long lease in anticipation that they may eventually revert to the freeholder."
	Apparently, the right hon. Member for Greenwich and Woolwich was sympathetic to the problem, and concurred that it needed to be addressed; according to Mr. Mason,
	"He suggested that an amendment should be proposed to the Bill which was then under consideration in the House of Lords. He suggested that I"—
	Mr. Mason—
	"liaise with the Leasehold Advisory Service concerning the drafting of an appropriate clause. Unfortunately, they have not been able to be of any assistance due to pressure of work. The Bill was . . . then lost as a result of the General Election and has subsequently been reintroduced."
	Mr. Mason adds:
	"I would be surprised if there are a large number of properties in rural areas which have been let for a term in excess of 21 years, but which have not effectively been sold, and which therefore require the protection of the rural exemption, but it does appear . . . that there are at least some such properties which require protection. Presumably these may have been let at a rent which was not then a low rent in order that the leases of such properties should not be enfranchiseable. However, there are no such properties in Adlestrop.
	I suggest that the position of Adlestrop, and any other similar situations, can be met by a simple amendment to Section 1AA(3) of the Leasehold Reform Act 1967 by the addition of paragraph (d):
	'(d) The tenancy was granted for a term of years certain not exceeding 80 years'."
	Mr. Mason then proposes further amendments. His letter continues:
	"The purpose of the amendment is to draw a distinction between those properties which have been sold off and those which have merely been let. Accordingly, properties which are let for a term in excess of 80 years would be outside the rural exemption, whilst those let for a shorter term would remain within the rural exemption."
	Any infelicities in the amendments that we are considering would not alter the fact that a considerable problem exists, and it is surely not beyond the wit of parliamentary counsel to sort it out. Mr. Mason continues:
	"I would expect that any properties which are let with any reasonable prospect that they would revert to the freeholder would have been let for a term somewhat less than 80 years. I have suggested a term of 80 years in order to accord with the marriage value provision, although that is applicable to leases where the unexpired term is in excess of 80 years, whereas my suggested amendment refers—I think correctly—to the original term. If it was wished the length of term could instead be 90 years.
	Such an amendment would mean that all properties within Adlestrop would be enfranchiseable on the same terms. If such an amendment is not introduced there would be a continuing distinction between properties which are or are not enfranchiseable. Such a situation is clearly inappropriate in a small village such as Adlestrop.
	The amendment would not only address the present anomaly but would also do away with the current lack of clarity as to the status of certain properties in Adlestrop. However, it would not prejudice properties in rural areas which were let for less than 80 years and which would continue to be excluded by Section 1AA(3).
	There may be other similar situations to Adlestrop which would also be addressed by the amendment . . . I would hope that the Government would consider it appropriate to include such an amendment in the Bill."
	In her letter of 13 February to my hon. Friend the Member for Cotswold, the Minister said:
	"It is most unfortunate that the Leasehold Advisory Service has been unable to assist your constituent, as we're now in a position that it will not be possible to complete the procedure he would expect before supporting an amendment such as your constituent would like to be made to the Bill.
	We do not think that it would be right to amend the law to meet the particular concerns of one class of interested party without first consulting all interested parties. Therefore, it is not something that we could realistically resolve at this late stage in the Bill's proceedings."
	We shall shortly consider an amendment—tabled by the hon. Member for Wimbledon—that relates to private Acts, but I should first point out that this important matter can be resolved. I look to the Minister for an assurance that it will be resolved. It appears that the provision could take on the character of a hybrid provision, because it could affect certain persons in a manner different from other persons in that category. The Minister shakes her head and I am glad that she does—I simply thought on the spur of the moment that such a problem might exist. If no such problem exists, there is even less reason for not dealing with the matter by way of future assurances. The Minister shakes her head again—I find this process of mute exchange difficult to bear.
	The Minister's letter concludes as follows:
	"I'm sorry I can't give a more positive response. If your constituents would like to come and talk through their concerns, they would be welcome."
	I am glad to note that the Minister now nods her head.

Shona McIsaac: I have listened carefully to the concerns of the residents of Adlestrop, but does the hon. Gentleman consider the Adlestrop question or the Schleswig-Holstein question the more difficult?

William Cash: I am pleased that the hon. Lady has asked such an incredibly perceptive question. In doing so, she has introduced a completely new dimension to the Schleswig-Holstein question, which establishes three categories of person: one who is dead, one who has forgotten, and one who has gone mad. However, it is not clear which category is relevant to this case. As I do not represent Cotswold, I do not know the details of this case, other than what is contained in Mr. Mason's extremely erudite letter on behalf of the Adlestrop residents' association. I am therefore unable to add anything to what my hon. Friend the Member for Cotswold could have contributed himself.

Greg Knight: Is there not a danger that the current residents of Adlestrop will themselves be dead before the matter is resolved? As I understand it, a meeting with the Minister took place 14 months ago, in January 2001. How much more time must elapse before the consultation period is brought to an end?

William Cash: I have great sympathy with what my right hon. Friend has just said. The Department is well aware of the issue, which has been discussed extensively for a long time. The Minister had to admit that, despite the sympathy expressed by the right hon. Member for Greenwich and Woolwich, the Leasehold Advisory Service was unable to deal with the issue. However, I consider the reasons given thoroughly unconvincing.

Sally Keeble: The original intention was that the Leasehold Advisory Service might advise leaseholders on their individual circumstances, not that it should advise on the drafting of an amendment.

William Cash: That is no more convincing. The more the Minister comes to the Dispatch Box to answer my points—and the more she sits and shakes her head—the more concerned I become. I am determined to divide the House on this issue, because it is very strange.

Sally Keeble: If the hon. Gentleman had been so concerned, he could have met the constituents of the hon. Member for Cotswold (Mr. Clifton-Brown) and talked through the matter with them. He would then have had a much better grasp of all the issues involved in this complex case.

William Cash: I do not want to get into a slanging match with the Minister, but from the evidence that I have it is clear that the advisory service did a minimal job on this point. The Minister said that it was not for the advisory service to engage in drafting exercises, but this is not the most difficult undertaking. It is a matter of public interest that goes beyond Adlestrop, for the reasons that I have given.

Sally Keeble: Perhaps the hon. Gentleman should read the correspondence in his possession carefully, to see how many people in Adlestrop can be identified as having expressed an interest in enfranchising. That would give him some indication of the scale of the issue.

William Cash: The Minister implies that relatively few people are affected, but the issue is not a matter of special pleading in relation to Adlestrop. It may apply to a range of other people throughout the country. When I made that point earlier, the Minister nodded because she knows that the case raises questions on the rural exemption, which the hon. Member for Cleethorpes mentioned, and for many estates in country areas. Such situations could arise in many villages, so the Minister's response is not good enough. I do not wish to engage in a slanging match, but I am concerned that the hon. Lady is being obtuse. It would not be difficult to resolve the question. The hon. Lady has not replied to the debate yet, but I am not happy with the direction of her argument.

Greg Knight: Is an injustice any less of an injustice if it affects only a few people?

William Cash: That is exactly my point. If the operation of the law in respect of a minority is defective, we have an opportunity to remedy the problem. I am increasingly concerned that the Minister has made a policy decision that the Government will not assist a relatively small number of people in Adlestrop with a problem that has arisen as a result of great complexity in the law. I do not doubt that it has cost the people in question considerable time and expense, but the problem has arisen because earlier legislation is defective. It is a matter of putting right something that is wrong.
	The hon. Member for Wimbledon is about to speak to amendment No. 62, dealing with private legislation. I have great experience of those matters and I can tell the Minister that private Acts have been introduced over and over again to deal with special cases that give rise to considerable difficulties in practice. Anomalies exist, and this issue is an example on which the Government could help out. Where is their sense of social justice?

Andrew Selous: Does my hon. Friend agree that the letter from Mr. Mason states that the previous Minister—now the Minister for Local Government—accepted that the problem needed to be addressed? It appears that the Department's policy has changed, because the present Minister's predecessor—she shakes her head, but we have it in writing from Mr. Mason—agreed that the problem needed addressing.

William Cash: I shall not pursue the argument any further.

Bill Wiggin: Following my unhelpful previous intervention, I am especially grateful to my hon. Friend for giving way again. Bearing in mind the lack of complexity of amendment No. 88, what does he imagine the Minister would have said to the constituents she offered to meet when they came to talk through their concerns? Would she have tried to persuade them that they did not want to enfranchise? What advantage would the constituents have gained from meeting the Minister on such a straightforward amendment?

William Cash: That is a good question, and we have put it vicariously to the Minister, because she will have heard my hon. Friend's remarks. The mere fact that anomalies affect a limited number of rural areas is no reason—if the Government mean what they say about rural communities, social justice and playing fair with people—to resist the opportunity to remedy a defect in the law. The Bill is before the House and the amendment has been selected. Why will not the Government take the appropriate action? If they are not prepared to do so, we will divide the House on the question. I shall give the Minister the benefit of the doubt until she replies. She knows all about this matter, because she has already told us that she was at the meetings with the Minister for Local Government. I shall listen with great interest to her reply, but without prejudice to any comment I may wish to make on what the hon. Member for Wimbledon says on his mysterious and fascinating amendment.

Roger Casale: Amendment No. 62 stands in my name, but I can confirm that I shall not seek to divide the House on it. I wish to seek some assurances from the Minister in relation to a matter that affects my constituents in Wimbledon, but I do not wish to detract from my overall support for the Bill in any way. I was unfortunately not called to speak on Second Reading and could not serve in Committee because of my commitments on another Committee. That is why I am raising this issue on Report.
	I am sure that the Minister will accept that I have been a champion of the Bill on behalf of many leaseholders in my constituency who wish to apply for the right to manage and, perhaps, eventually acquire freeholds. On behalf of Mrs. Robertson and the residents of Grosvenor Court, Langham Court and many other constituents, I strongly support the Bill
	Amendment No. 62 is compatible with the Bill's overall objectives. However, every new rule requires exceptions in particular circumstances. In this case, those circumstances arise in relation to a particular category of leaseholders in my constituency—those who lease property on Wimbledon common.
	To anticipate any possible interventions, I should say that I am not referring to the Wombles, because I have spent many happy hours with my young daughter looking for their houses so far without success.
	There are properties on Wimbledon common that are leased and are subject to a private Act. Like my constituents, and indeed the mythical Wombles, my daughter and I have been able to enjoy many happy hours roaming freely on Wimbledon common because the land is protected by that private Act.
	Members who are familiar with the flight path into Heathrow from the east will know that just before planes fly over the neighbouring borough of Richmond, disturbing the residents' sleeping patterns, they fly over a vast green space in south-west London which is Wimbledon common. It is green space because it has not been sold off for development, and that is because it has been protected since 1871 by the private Act.
	The private Act is an Act of Parliament that safeguards private property for the public benefit. It allows the property to be leased, but the freehold is held inalienably under its provisions. The Act concerned is the Wimbledon and Putney Commons Act 1871. Like many other 19th-century statutes governing open spaces, the Act provides that the commons are to be maintained for the benefit of the public and, in consequence, prohibits the sale of any part of them. Hon. Members will appreciate that the prohibition on sale is intended as a guarantee against alienation of the land.
	In anticipation of my speech, hon. Members have asked about the background to the Act. It goes back to when the railway came to Wimbledon and many people sought to move to the area, so there was a premium on the land. Earlier laws and rights going back to feudal times meant that local people could gather firewood and graze their cattle on Wimbledon common. New house owners, who were not themselves dependent on grazing cattle and collecting firewood, were nevertheless aware of those rights, and they came to Parliament and had the rights enshrined in the 1871 Act.

William Cash: Does the hon. Gentleman know which railway it is?

Roger Casale: It is the railway line that goes through Wimbledon station.

William Cash: Which one?

Roger Casale: It is the line that goes into London Waterloo. Before we get distracted—in Committee we heard long treatises about railway stations and embankments throughout the country—I want to emphasise the uniqueness of the provisions enshrined in the 1871 Act.
	We in Wimbledon are proud of the tradition that led to the Act and grateful for the measures that have allowed people to enjoy the commons since that time. Clause 142 abolishes the current bar on a tenant who has been granted an extended lease on a property having a claim to the freehold. It so happens that there is a property on Wimbledon common that is held on an extended lease. It might therefore be argued that even though the 1871 Act provides that no part of the commons can be sold, clause 142 trumps that provision and entitles the leaseholder to claim the freehold. Such an outcome would be extremely unfortunate because it would mean that part of the commons would be alienated.
	The amendment seeks to put the issue beyond doubt by providing explicitly that clause 142 does not allow the acquisition of the freehold of property held inalienably under a private Act such as the 1871 Act. As I said, I believe the amendment to be consistent with the Government's overall objectives. The consultation paper that preceded the Bill recognised the potential difficulty over property held inalienably for the public's benefit under such private Acts. It compared the position with that of properties held by the National Trust, noting in paragraph 92:
	"Both the Leasehold Reform Act 1967 and the Leasehold Reform, Housing and Urban Development Act 1993 make specific exemptions from leasehold law for properties owned by the National Trust. It is not possible to enfranchise a house or a block of flats or to renew the lease of an individual flat where the property is on land which has been declared inalienable by the National Trust. These provisions are necessary to prevent the Trust losing control of properties which it holds for the nation under powers granted to it by Parliament".
	The Government recognised that the position of other properties might not be entirely clear and stated in paragraph 94 of the consultation paper that they were
	"minded to apply the exemptions enjoyed by the National Trust to other properties held and protected under Acts of Parliament."
	The paper indicated, however, that there might be difficulties concerning the ability to identify all properties that could or should be caught by such an exception. I recognise that difficulty and I have tried to counter it in the wording of the amendment.
	I appreciate that the absence of provision in the Bill is consistent with the assumption that provisions in private Acts that prohibit the sale of property held for public benefit will continue to govern, making an amendment unnecessary. Whatever the explanation, I should be grateful for the Minister's reassurance that it is not the Bill's intention to override private Acts that prevent the sale of land held for the public benefit in circumstances such as those that exist on Wimbledon common.
	In Wimbledon, where so many of us depend on the common for leisure and recreation, we do not want to start to undo the work that was started 150 years ago to protect the common for the enjoyment of the community.

Sally Keeble: The amendments deal with very specific circumstances involving individual Members' constituency interests. Amendment No. 88 would limit the rural exemption to cases in which the lease was originally granted for less than 80 years. The matter was raised by the hon. Member for Cotswold (Mr. Clifton-Brown), who is not here, and the amendment was inspired by the circumstances of Adlestrop.
	I note that several Conservative Members have entered the Chamber and are making all kinds of remarks about the matter. I assure them that, unlike their spokesman, I have not only exchanged correspondence with the people concerned but had a meeting with them at which the issues were discussed in some detail. I told them that it would not be possible for the Government to amend the Bill to support their position. However, it may help if I go through some of the issues.

William Cash: We all understand the constraints on the Commons Report stage of a Bill that was introduced in the Lords. Although obviously we hope that the amendment will be made, which is why we shall divide the House, the question is whether the Minister is prepared to give an assurance that the problem will be dealt with in future legislation if the Government are not minded to accept the amendment.

Sally Keeble: If the hon. Gentleman had considered the issue before coming here and simply reading out the letter that he had been given, he would understand exactly why it is not possible to deal with the matter in the Bill. That has nothing to do with how long people have known about the matter; it has to do with the circumstances of the individual case.
	It is not clear from the discussions that my predecessor and I had with the hon. Member for Cotswold and a representative of the leaseholder whether the Adlestrop leaseholders are caught by the rural exemption, which, as the hon. Member for Stone (Mr. Cash) rightly says, is the point in question. The leaseholders were directed to the Leasehold Advisory Service, not to get an amendment drafted—that is not the role of the service—but to get advice on their existing rights and on whether they would be entitled to enfranchisement under existing legislation, let alone under the Bill. As I said, it is not clear whether they are caught by the rural exemption; that is a point on which they must seek legal advice. It would be irresponsible of any Government to introduce a provision whose effect was not fully understood, not only by us but by the people in question, who may not have not determined whether they are entitled to the franchise.
	We have no way of knowing the amendment's full effect or who would be affected by it. The provision would limit rural exemption in cases when the lease was originally granted for less than 80 years; the length of different leases provided at Adlestrop would have to be determined exactly. I do not know whether the hon. Member for Stone has that information in the letter that he was given, but I certainly have not seen it. It is not clear whether the people of Adlestrop want to enfranchise, nor whether there have been any discussions with the landlord. It is not clear how they are affected by different pieces of legislation and whether they are affected by rural exemptions. We are not willing to change a law with a national application to meet the concerns of certain people—and I do not believe that Members of Parliament would want us to do so—when we do not know how many people are affected; we do not know how many people in that settlement are involved and even whether they would be affected by the measure. There has not even been any consultation on the matter.
	That said, as the hon. Member for Cotswold is aware, I recently received detailed correspondence from a representative of the Adlestrop leaseholders. Although he is not here, I can assure him that I will make sure that the matter is dealt with as helpfully and fully as possible. I shall give our view on whether those properties are exempt or not, which will involve getting a fair amount of information that so far has not been forthcoming.

Shona McIsaac: Much has been made in our debate about the clause on rural exemption. I have had a chance to look at the Minister's words in Committee, and I hope that she will reiterate her message tonight, so that people are clear where she and the Government stand. She told the Committee that the Government
	"have some sympathy for the suggestion that the rural exemption should be amended so that it is better targeted".—[Official Report, Standing Committee D, 24 January 2002; c. 212.]
	She went on to say that interested parties should be consulted before that was done. If she will repeat that message clearly for the hon. Member for Stone (Mr. Cash), he may be reassured and not divide the House so that we could get on and discuss forfeiture.

Sally Keeble: I am happy to repeat my previous assurances, although I do not believe that that will have any effect on the Opposition—[Interruption.] The hon. Member for Stone may make rude remarks, but the Opposition are not even remotely familiar with the case that they have raised. They have not provided any evidence that they know how many properties in Adlestrop would be affected by the measure and how many leaseholders want to enfranchise. They have received a letter from one person, but that is all. They are not proposing to abolish rural exemption, but to deal with properties with a lease of less than 80 years. They do not even know how many properties would be affected.

William Cash: The Minister is getting unnecessarily personal.

Sally Keeble: I said, "They".

William Cash: All right. I simply note that there is a certain stroppiness in relation to Adlestrop.
	We now have conclusive evidence in the form of the allegations that the Minister has just made, which I do not dispute. However, I have provided the best description that I can of the circumstances, with which I was furnished by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown). The Minister has proved that there is a fourth category in the Schleswig-Holstein question—a Government who do not know the answer.

Sally Keeble: That is nonsense. I am not surprised that the hon. Member for Cotswold is not here. He has represented fairly his constituents' interests, but they have not been advanced in this evening's discussion. As I have said repeatedly, and as I told the representative of the Adlestrop leaseholders, we are prepared to look at further information. At our meeting with the representative and the hon. Member for Cotswold, there was not a lot of information available about the circumstances of all the properties in Adlestrop and the consequences of any change to the law for the settlement, let alone anywhere else.
	I shall now deal with amendment No. 62. I welcome the remarks of my hon. Friend the Member for Wimbledon (Roger Casale) on the Bill and its importance to his constituents. The amendment would exempt all land held under local Acts of Parliament from the provisions of clause 142. As Members will know, clause 142 amends the Leasehold Reform Act 1967 to allow leaseholders who have extended their lease to buy their freehold or to benefit from security of tenure when that lease comes to an end. Currently, people who extend their leases under the 1967 Act are left in an unfavourable position. Once the extended lease begins, they lose the right to enfranchise for ever. Moreover, when the extended lease ends, they have no security of tenure and may face eviction from their home, which is unduly harsh. If a leaseholder can afford to pay a fair price for the leasehold of their home, they should be entitled to buy it. If instead they are prepared to pay the appropriate rent for the property after their lease comes to an end, they should be able to stay in their home as renting tenants.
	The clause will amend section 16 of the 1967 Act accordingly. The new rights will apply to leases that have already been extended as well as those extended after the Bill has come into force. My hon. Friend said that the Wimbledon and Putney Commons Conservators were concerned that land that they hold under a local Act will be adversely affected by the clause. We are sympathetic to those concerns, but clause 142 will not in fact have the effect that he suggested. As I said, it affects the position of leaseholders who have already taken advantage of the provisions of the 1967 Act to extend their leases. They will now be able to use the provisions of that Act to acquire the freehold, but clause 142 does not confer any additional rights on such leaseholders; if they were previously unable to acquire the freehold because the landlord was unable to dispose of it, the situation remains unchanged. We do not consider it appropriate to do anything that could take away any rights that tenants currently enjoy under the 1967 Act.
	My hon. Friend mentioned the consultation paper that my Department issued in August 2000 which made reference to that particular problem. However, only the Wimbledon and Putney Commons Conservators have identified any property that would be affected by the new provisions. As I said, we do not consider it appropriate to do anything that could take away any rights that tenants currently enjoy under the 1967 Act. If the Bill mentioned a local Act and made provision for it to be treated differently from anything similar, we would risk making the Bill a hybrid, which would obviously wreck it. We do not want to do that. My hon. Friend said that he supports the Bill in principle and is definitely not a wrecker.
	On the basis of my response, I invite my hon. Friend and the hon. Member for Stone not to press their amendments.

William Cash: I shall be brief because we have discussed the problem at length. I am glad that the Minister recognised that the amendment tabled by the hon. Member for Wimbledon (Roger Casale) could lead to hybridity. There is another problem, as private Acts could also apply to land in Epping Forest, the New Forest and many other places.
	We are not at all convinced by the arguments that the Minister advanced with regard to Adlestrop, and we intend to press the amendment to a Division.

Roger Casale: I wish to put it on record that I am grateful to my hon. Friend the Minister for the assurances that she has given in respect of the matter that I raised.

Question put, That the amendment be made:—
	The House divided: Ayes 113, Noes 325.

Question accordingly negatived.

Clause 141
	 — 
	Personal representatives

Amendment made: No. 45, in page 68, line 27, leave out "one year" and insert "two years".—[Ms Keeble.]

Clause 150
	 — 
	Consultation about service charges

Amendment made: No. 60, in page 71, line 25, leave out Clause 150.—[Ms Keeble.]

Clause 151
	 — 
	Statements of account

Sally Keeble: I beg to move amendment No. 46, in page 73, line 40, at end insert—
	'required to be supplied under this section.'.

Madam Deputy Speaker: With this it will be convenient to take Government amendments Nos. 47, 49, 51 and 59.

Sally Keeble: This is a minor consequential amendment made in light of new clause 11, which provides for leaseholders to be sent a summary of their rights and obligations in relation to service charges whenever they are sent a service charge demand. New clause 11 also gives the Secretary of State power to prescribe the form and content of such summaries. Clause 151 requires leaseholders to be sent a summary of their rights and obligations in relation to service charges, but these summaries are to be sent out with leaseholders' annual accounting statements, and the Secretary of State would also have power to prescribe their form and content. The amendment makes it clear that the power granted by clause 151 applies only to documents that landlords are required by the clause to supply.
	Government amendments Nos. 47 and 51 could be termed the Daejan amendments. Last July, the case of Daejan Properties Ltd. v. London leasehold valuation tribunal was brought before the Court of Appeal. Subsequently, the court ruled that LVTs only have the jurisdiction to decide the reasonableness of disputed service charges that are still unpaid except in certain very limited circumstances. We consider that decision to be most unfortunate from the viewpoint of both leaseholders and landlords. As leaseholders become aware of its effect, they may be inclined to withhold service charges until they are certain that those charges are reasonable, because it may otherwise prove very difficult for them to launch any challenge. In turn, that will create problems for managers of leasehold property, who may find it increasingly difficult to obtain payments in advance and be reluctant to commence work without them.
	We have already taken steps to ensure that under clause 151, LVTs will have a clear power to rule on service charges that have already been paid. However, last month we were informed that the London LVT had been refused leave to appeal against the Court of Appeal decision on the Daejan case. In light of that development, we decided to take another look at clause 151 to see whether there was any possibility, however remote, that it might be construed as giving LVTs the jurisdiction to rule only on unpaid service charges. We decided that it might be advisable to table a further amendment to put the matter beyond any possible doubt. Government amendment No. 47 would achieve that end.
	The Bill also gives LVTs a new jurisdiction to rule on administration charges. Again, we consider it important to make it clear that LVTs are to have the jurisdiction to rule on administration charges that have already been paid as well as those that are still outstanding. Government amendment No. 51 achieves that aim.
	Government amendment No. 49 is a drafting amendment. Schedule 11 currently contains a definition of a fixed administration charge, but the only place where the term "fixed administration charge" is used in the Bill is in the definition of "variable administration charge". Therefore, the amendment replaces those definitions with a new definition of variable service charge, thus simplifying the provision. Government amendment No. 59 corrects an error in the drafting of schedule 14.
	I commend the amendments to the House.

William Cash: In the circumstances, I have no points to make on this group of amendments.
	Amendment agreed to.

Clause 153
	 — 
	Liability to pay service charges: jurisdiction

Amendment made: No. 47, in page 76, line 31, at end insert—
	'(1A) Subsection (1) applies whether or not any payment has been made.'.—[Ms Keeble.]

Clause 154
	 — 
	Service charge contributions to be held in separate account

Amendment made: No. 48, in page 78, line 31, at end insert—
	'(9A) Nothing in this section applies to the payee if the circumstances are such as are specified in regulations made by the Secretary of State.'.—[Ms Keeble.]

Schedule 11
	 — 
	Administration charges

Amendment made: No. 49, in page 124, line 23, leave out from "Schedule" to end of line 28 and insert—
	'"variable administration charge" means an administration charge payable by a tenant which is neither—
	(a) specified in his lease, nor
	(b) calculated in accordance with a formula specified in his lease.'.—[Ms Keeble.]

Sally Keeble: I beg to move amendment No. 50, in page 125, line 12, at end insert—
	'Notice in connection with demands for administration charges
	3A (1) A demand for the payment of an administration charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to administration charges.
	(2) The appropriate national authority may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.
	(3) A tenant may withhold payment of an administration charge which has been demanded from him if sub-paragraph (1) is not complied with in relation to the demand.
	(4) Where a tenant withholds an administration charge under this paragraph, any provisions of the lease relating to non-payment or late payment of administration charges do not have effect in relation to the period for which he so withholds it.'.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	Government new clause 9—Failure to pay small amount for short period.
	Government new clause 10—Power to prescribe additional or different requirements.
	Government new clause 11—Notice to accompany demands for service charges.
	New clause 3—Abolition of forfeiture—
	'A right of re-entry or forfeiture under any proviso or stipulation in a lease of a dwelling for a breach of covenant or condition in the lease shall not be enforceable by action or otherwise.'.
	New clause 6—Balance of proceeds of forfeiture to be paid to leaseholder—
	'( ) Where a forfeiture action is successful, after deduction of all debts any balance shall be paid to the leaseholder.'.
	New clause 8—Restrictions on and relief against forfeiture of leases and underleases—
	'. In section 146 of the Law of Property Act 1925 (c. 20) (restriction on forfeiture) there is inserted—
	(4A) Where the court has made an order for forfeiture pursuant to subsections (1) to (4) above, any balance remaining after the payment of the lessee's debts owed to the lessor shall be paid to the lessee".'.
	New clause 19—Leases exceeding 21 years—
	'.—(1) This section shall apply to any lease granted for a term of years certain exceeding 21 years, whether or not it is terminable before the end of the term by notice given by or to the tenant or by re-entry, forfeiture or otherwise and whether made before or after the coming into force of this section, where the rent reserved for the time being is less than £1,000 per annum.
	(2) In this section a right of forfeiture shall mean a provision in a lease whereby the landlord under a lease has a right to re-enter the premises demised (or part thereof) upon the happening of specified events, whether the right to re-enter is expressed as a condition or as a proviso on breach of covenant or otherwise howsoever.
	(3) No landlord may re-enter the premises demised (nor any part thereof) pursuant to a right of forfeiture, insofar as the exercise of the right of forfeiture is based on the non-payment of money.
	(4) Where a tenant fails to pay monies payable under the terms of the lease, the person entitled to payment of the said monies shall be entitled to a first legal charge (herein referred to as a "landlord's charge") over the lease for the monies payable and for his reasonable costs and expenses of and in connection with the landlord's charge and the enforcement thereof, such costs and expenses to be payable on the indemnity basis.
	(5) Subject to the next subsection, a landlord's charge shall have priority to all charges, underleases and other encumbrances estates easements estoppels and rights of whatever description created by or deriving title from or through the tenant, whether at law or in equity and whether created or existing before or after the coming into force of this Act (hereinafter referred to as "subsidiary interests").
	(6) Notwithstanding the previous subsection, no local land charge within the meaning of the Local Land Charges Act 1975 shall be a subsidiary interest.
	(7) Subject to the next subsection, a landlord's charge may be enforced in any manner in which a first legal charge may be enforced.
	(8) The landlord's charge may only be enforced by sale with leave of the High Court or the County Court.
	(9) On such a sale, the purchaser shall purchase free from all subsidiary interests.
	(10) Where a landlord's charge has no reasonably realisable commercial value, the landlord may apply to the High Court or the County Court for an order terminating the lease, but such an order shall not release the tenant from any pre-existing obligation under the lease.
	(11) Any person holding any subsidiary interest shall be entitled to have subrogated to him the landlord's charge on payment of the sums secured by the landlord's charge and shall be entitled to add his reasonable costs and expenses of and in connection the said exercise of the right of subrogation to the landlord's charge, such costs and expenses to be assessed on the indemnity basis.
	(12) Where more than one person holding a subsidiary interest wishes to have subrogated to him the landlord's charge, the priority as between such persons shall be determined in accordance with the rules of equity.
	(13) Where on a sale of the lease pursuant to subsection (8) hereof, there is a surplus after payment of all the monies secured by the landlord's charge, the distribution of the said surplus shall be made in accordance with the rules of equity.
	(14) Rules of Court shall provide for service on the tenant and on persons holding subsidiary interests of any application made pursuant to subsection (8) hereof for leave to enforce the landlord's charge by sale and for the circumstances in which such service may be dispensed with.
	(15) Notwithstanding the provisions in subsections (4) and (11) hereof permitting the adding of costs and expenses to the landlord's charge, the High Court and the County Court shall have the power to make in substitution for the said provisions some different order as to incidence, basis and amount of the costs and expenses of the holder of the landlord's charge and of the lessee and of any other person where such different order would be just.
	(16) The figure for the annual rental specified in subsection (1) hereof may be varied from time to time by regulations made by the Secretary of State.
	(17) Nothing herein shall affect the validity or effect of a forfeiture of a lease, whether by re-entry on or service of originating process seeking to re-enter the premises demised (or part thereof) or otherwise, effected before the coming into effect of this section.
	(18) "Lease" in this section shall include underleases and "landlord" and "tenant" shall be construed accordingly.
	(19) The existence or potential existence of a landlord's charge shall not prevent any person who is restricted or prohibited whether by statute or otherwise from lending money save on the security of a first legal charge from lending money on the security of a charge which, but for the existence or potential existence of the landlord's charge, would have been a first legal charge.'.
	Amendment No. 26, in clause 163, page 84, line 14, leave out Clause 163.
	Amendment No. 27, in clause 164, page 84, line 39, leave out Clause 164.
	Amendment No. 28, in clause 165, page 85, line 43, leave out Clause 165.
	Amendment No. 67, in page 86, line 1, after "(1)", insert—
	'(a) for the words "exercise a right of re-entry or forfeiture" substitute "enforce a landlord's charge"; and
	(b)'.
	Amendment No. 64, in page 86, line 9, leave out—
	'exercise a right of re–entry or forfeiture'
	and insert "enforce a landlord's charge.".
	Amendment No. 63, in page 86, line 27, leave out subsection (5).
	Government amendments Nos. 61 and 58.

Sally Keeble: The Government amendments and new clauses deal with issues that hon. Members will have been anxious to speak about for a long time this evening. They all relate to forfeiture, which I know is a matter of great concern to hon. Members in all parts of the house and is one of the factors that has brought the whole leasehold tenure system into a certain amount of disrepute.
	It might be helpful if I set out some of the background before moving on to the details of the proposals, which go a long way towards tightening up existing arrangements. I hope that they will reassure hon. Members that the Government have listened carefully to the concerns that have been expressed, especially in Committee and on Second Reading, and have worked hard to find a way of taking matters forward and providing further safeguards.
	The Government accept the widespread concerns about the forfeiture system. On Second Reading, we heard about some distressing examples of leaseholders who had fallen foul of the system. Forfeiture is a draconian penalty and many people feel that it is unfair that a leaseholder can lose their home, possibly for the non-payment of a relatively modest debt, while the landlord obtains a large windfall profit.
	Some hon. Members who spoke to me about that during the discussions that took place seemed to be unaware that that is the current position and has been so for some time. The Bill includes several provisions that improve the situation, and the Government amendments and new clauses will further improve it. The Bill contains measures restricting freeholders' ability to use forfeiture and the amendments and new clauses will provide further safeguards for leaseholders. In effect, they mean that forfeiture will operate only as a sanction of last resort for leaseholders who wilfully refuse to pay money that they rightfully owe to the freeholder. We have given great thought to those measures since the Bill was debated on Second Reading and especially since it was considered in Committee. I shall give some of the background to the proposals and explain the extent to which they protect leaseholders from any continuing abuse by freeholders.
	Although forfeiture has remained a sanction for freeholders, its draconian nature has meant that in practice the courts have been reluctant to grant it unless the leaseholder has failed to take advantage of opportunities to remedy matters. However, difficult cases arise, some of which have led to concerns being expressed by hon. Members on both sides of the House. Moreover, forfeiture has enabled landlords to practise a variety of abuses, including using it as a threat to extract money from vulnerable leaseholders. The Government put their mind to that problem and the amendments and new clauses deal with those issues.
	In December 1999, following the Government's consultation paper on residential leasehold reform in 1998, we published a document entitled, "Leasehold Reform: the Way Forward", in which we announced that we intended to replace forfeiture with a fairer regime. Hon. Members—mostly Conservative Members—have accused us of reneging on those commitments, but that is not so. The document proposed that determination of facts would be separated from repossession proceedings; that penalties for late payment of ground rent and other administration charges would have to be reasonable; that leaseholders would have the right to challenge the reasonableness of any such charge before a leasehold valuation tribunal; and that ground rent would not be recoverable unless demanded and there would be a period of grace before any additional charge could be made. The Bill will implement all—I repeat, all—those proposals.
	We also proposed that where the landlord obtained possession, the leaseholder should be compensated for the loss of leasehold interest after deducting moneys owed to the landlord. That remains our long-term aim. However, although the concept may seem relatively simple, legally and practically it is a complex matter. When we drafted the Bill we considered the issue carefully, but reluctantly came to the conclusion that we could not resolve all the complexities without delaying the Bill's introduction. The Bill implements all the proposals in "Leasehold Reform: the Way Forward" except, owing to practical difficulties, the proposal on deducting moneys. As the Bill extends many other benefits to leaseholders, it is right to proceed with it.
	The complexities surrounding the provision of the new regime cannot be properly resolved by a single new clause such as those tabled by my hon. Friend the Member for Bolton, South-East (Dr. Iddon) or the hon. Member for Stone (Mr. Cash). Instead, we decided to focus our attention on the main abuses associated with forfeiture, including using it as a threat to extract payment and exploiting leaseholders' fear of challenging unreasonable charges or breaches of covenant that are unfounded. Hon. Members on both sides of the House cited examples of such cases that they have had to deal with in their constituencies.
	Let me explain how the Bill will set about ending those abuses. The provisions are scattered throughout the Bill and we did not debate the relevant clauses in Committee, so we have not yet considered their impact. Clause 162 provides that forfeiture proceedings cannot be brought against a long leaseholder for non-payment of ground rent unless the landlord has issued a written demand and the rent has remained unpaid for more than 30 days. Regulations will prescribe the form and content of the demand and we intend that they will include a requirement clearly to spell out leaseholders' rights.
	Clauses 163 and 164 prevent the commencement of forfeiture proceedings for breaches of covenant—including the issue of notices under section 146 of the Law of Property Act 1925, which are often phrased in threatening terms—unless a leasehold valuation tribunal or court has determined that a leaseholder is actually in breach of their lease and has been given a period to rectify the matter.
	Clause 165 similarly prevents the commencement of proceedings for non-payment of service charges or administration charges unless a leasehold valuation tribunal or court has determined that the sums claimed are legally payable and reasonable.
	Those are important measures that will dramatically reduce the scope of unscrupulous landlords in exploiting leaseholders' fears. They also deal with issues related to debt and with other breaches of covenant such as persistent antisocial behaviour or littering or dumping in communal areas. Much of the discussion of forfeiture has revolved around payment of debt, but it can also arise as a result of other breaches of covenant, so the regime must deal with those as well.
	In effect, the Bill provides for a two-stage legal process—first, to go to the tribunal to establish whether there has been a breach of the terms of the lease and, secondly, to go to the courts for approval for forfeiture.
	Permanent elimination of abuses of forfeiture would require its complete abolition, as proposed in new clause 3. In considering such a measure, we must accept that managers of leasehold properties need an effective means of redress against those who fail to comply with the terms of the lease. Unfortunately, some leaseholders refuse to pay their fair share of the cost of maintaining their block or estate, no matter how reasonable those charges may be, or carry out structurally damaging repairs—for example, demolishing internal load-bearing walls or taking similar actions that damage the property interests of other leaseholders and of the freeholder. We discussed earlier the importance of ensuring that there is proper financing to pay for the maintenance of property.
	One of the advantages of the leasehold system is that it provides a means of enforcing certain rules on a group of individuals living in a community, whether it be in a block of flats or on a housing estate. Simply abolishing forfeiture in the manner proposed by the hon. Member for Torbay (Mr. Sanders) in new clause 3 would seriously undermine that system. Leasehold management companies, which are unlikely to have a substantial capital reserve, are particularly vulnerable if irresponsible leaseholders fail to pay their fair share. Other leaseholders may suffer the consequences of essential repairs not being carried out through lack of funds. Ordinary civil debt recovery or injunction proceedings are lengthy and not always effective against those who are determined to avoid their responsibilities. We would need to replace forfeiture with an alternative that provided an effective enforcement mechanism, but without the same scope for abuse.

Adrian Sanders: Can the Minister explain why the proposals on commonhold include a provision that prevents the right of forfeiture?

Sally Keeble: The answer is that commonhold and leasehold are two different types of tenure.
	As I have said repeatedly during our consideration of the Bill, creating an alternative to forfeiture is not a simple matter. Indeed, the Law Commission has been wrestling with the problem for many years, and its work has now reached an advanced stage. It has been developing proposals to abolish forfeiture across the board. One of the major objections to forfeiture is that, in the rare cases in which a lease is forfeited, the leaseholder is left with nothing. That can be a draconian penalty. To avoid this, the Law Commission is considering the scope for providing that a long lease be assigned to a third party, and for the value of that lease to be shared out. That would remove the unfairness of the current system, in which all the value passes to the landlord. The commission is also considering the scope for imposing penalties when landlords act improperly.
	Hon. Members have repeatedly expressed concern about the length of time the Law Commission has taken on this project, and have asked when we might expect to see the results. I understand that the commission plans to put forward revised proposals for consultation during late spring or early summer, with a view to preparing a draft Bill during the 2002–03 Session. I very much hope that this will produce a fairer and workable solution in the longer term.
	The hon. Member for Stone has tried to pre-empt the Law Commission's work with his new clause 19. I recognise some of the thinking behind his new clause from our consideration of possible alternatives to forfeiture, and he has no doubt borrowed from the Government's work. He has failed to achieve his goal, however, because his new clause has run into the same problems as our own work did, and into even greater ones. It leaves completely unresolved a number of practical and technical issues, which is why the Government cannot accept it.
	I do not want to run through all our concerns on the new clause—that would take far too long, and I recognise that other hon. Members wish to speak—but I shall deal with just one, to demonstrate how unworkable it would be, and what chaos it would introduce into the system. Subsection (13) proposes that any surplus should be distributed in accordance with the rules of equity. Equity, as the hon. Gentleman must know, is not a set of rules but a broad legal principle, and it is far too vague to determine the basis of apportionment. Given the proven track record of many of those who abuse the forfeiture process at present, it is essential that there is no room for argument over such a fundamental issue. The hon. Gentleman completely fails to set out who would make the distribution. Should it be the landlord or the court? To be workable, any provision would have to spell out clear, unambiguous rules and procedures for all foreseeable circumstances, and specify how disputes were to be resolved.
	A further weakness that the hon. Gentleman might not have realised is that the new clause applies only to forfeiture for debts—for failure to pay money. It would have no effect on the widespread abuses relating to use of forfeiture for other breaches of leases, such as the failure to obtain consent for buildings—an issue raised in Committee by my hon. Friend the Member for Bolton, North-East (Mr. Crausby). Unlike the Government's new clause 9, which I will describe shortly, it does not prevent the use of forfeiture for small sums, so leaseholders could face the prospect of the forced sale of their homes for non-payment of small amounts if they did not respond to proceedings.
	At this late stage in the Bill's progress, there is no scope for us to consider this matter further, or subsequently to introduce a revised new clause. In any case, we could not contemplate introducing such a major change to property law without full consultation with all interested parties. For example, in making any changes to property law, we would need to be satisfied that they would not affect the ability or willingness of lenders to provide mortgages.
	We have discussed briefly the proposed new clause with the Council of Mortgage Lenders. Its initial response was that the proposal was far too hurried and would need detailed consideration and guidance. It was also concerned that the measure could lead to an escalation of costs, which would be added to the landlord's charge, thereby eroding mortgagees' security. That could lead to lenders being reluctant to lend a high proportion of the value on leasehold properties, which would clearly not be in the interests of current or prospective leaseholders.
	I shall now move on to the Government's amendments. As I said in Committee, we have considered carefully the strength of feeling on this important issue, and the desire for further measures in the Bill to deliver better protection for leaseholders. We have proposed further safeguards for leaseholders, and I would like to explain the additional safeguards that these amendments would provide.
	To assist hon. Members in understanding the extent of the new safeguards that the existing provisions, and these new ones, would extend to leaseholders, officials have helpfully drawn up a flow chart of the steps that freeholders would need to follow before a leasehold property could be forfeit. These have been laid in the Library, and hon. Members may consult them at their leisure. They will see the extensive range of steps that a freeholder would have to follow. The flow chart illustrates this rather complex process, which is far removed from the simple procedure that it is sometimes thought to be. Almost all the safeguards in the flow chart arise from the Bill and the Government's amendments.
	New clause 9 is intended to prevent the use of forfeiture for small amounts of money. Forfeiture proceedings would be prohibited unless the amount outstanding exceeded a prescribed sum or unless the amount, or any part of it, had been outstanding for more than a prescribed period. This is designed to deal with the problem of ground rent grazers, and of people losing their homes for the sake of small amounts of money, or being frightened by demands for the money and paying up.
	In the Bill, the prescribed sum is set at £500. The level at which it would be introduced would be set by regulation, and we would consult on that, although our current thinking is that it should be set at about £350 in the first instance. That is the kind of sum that hon. Members have suggested in discussions. We would expect to set the prescribed period at about three years. That would make forfeiture unavailable for amounts of less than £350, unless they had been outstanding for more than three years.
	Regulations made under the power would be subject to the affirmative procedure by virtue of amendment No. 58, so there would be an opportunity to examine the matter closely, and to debate it at some length. Administration charges and penalties for non-payment of an outstanding amount will not be taken into account in determining whether the prescribed sum has been exceeded. This would prevent landlords trying to evade the provision by adding further charges to push the total above the prescribed sum. I am sure that all hon. Members will see the logic of that.
	New clause 10 deals with an abuse repeatedly mentioned by hon. Members in Committee. The proposal is intended to protect vulnerable leaseholders, such as those who suffer from a mental illness, who are unable to respond to the various warning notices required under existing legislation or other provisions of the Bill. We propose to require landlords to take reasonable additional or alternative steps when there is no response to demands or notices. We will consult on what steps would be appropriate, practicable and reasonable. This may include a duty to investigate the leaseholder's circumstances.
	That power would not apply in relation to properties subject to a mortgage. That is because mortgagees are normally informed of forfeiture proceedings, and have a right to seek relief. They invariably do so to protect their security. It is the leaseholders who do not have mortgages—for example, the elderly whose mortgages have been paid off—who would be protected by this measure. A number of hon. Members, including my hon. Friends the Members for Cleethorpes (Shona McIsaac) and for Great Grimsby (Mr. Mitchell), identified older people in their constituencies who have been vulnerable to bullying and abuse by freeholders, and who are in particular need of protection. We would hope that that would be of help to some of them.
	Regulations made under this power would also be subject to the affirmative procedure—amendment No. 58. There would be an opportunity closely to debate the provisions.
	New clause 11 is intended to ensure that leaseholders are aware of their rights and obligations by providing a power to require certain information to be provided with service charge demands. It should help also to prevent forfeiture being used as a threat by unscrupulous landlords. The form and content of these notices would be prescribed. It would set out leaseholders' rights to challenge service charges that they consider to be unreasonable. The notices would have to set out also restrictions on forfeiture. In addition, they would point out the possible serious consequences of non-payment of service charges and the dangers of ignoring demands. They would suggest that leaseholders take advice. Amendment No. 50 provides a similar power in relation to demands for administration charges.
	We believe that it will be important to improve awareness among leaseholders and landlords of their rights and obligations in this somewhat complex but important and sensitive area. It is therefore also our intention to produce a guide that will summarise in plain English, as hon. Members have repeatedly requested, all the relevant provisions concerning forfeiture proceedings.
	Amendment No. 61 provides that new clauses 9 and 10 would be binding on the Crown. The other changes already apply to the Crown by virtue of clause 166.
	I appreciate that I have taken quite a long time to set out the proposed measures. The new clauses and amendments have been carefully crafted by officials to meet some of the concerns that have been raised on both sides of the House on forfeiture. The additional measures, together with the existing provisions, should go a long way towards preventing the distressing cases that have been described, and which have been raised repeatedly by hon. Members. If hon. Members examine the flow chart of the steps that a freeholder would have to take, they will see clearly the safeguards that we have provided. They will see also that in practice forfeiture can be used only where leaseholders have wilfully and persistently defaulted on their obligations and have harmed other leaseholders or created the potential of harm. They should also ensure that landlords are not able to intimidate leaseholders with threats of the loss of their homes to secure payment of unreasonable charges.
	The additional safeguards that we are providing show that the Government have listened carefully to the views of hon. Members, and have responded with a range of measures that will be of real benefit to the constituents whose interests and homes hon. Members rightly seek to protect, and for whom they have been vocal in making a case. They represent major improvements in the safeguards for leaseholders, and represent also some major improvements to the Bill. I urge Opposition Members to withdraw their amendments and to support the Government amendment.

William Cash: We have heard an interesting justification for the Government's proposals as set out in their amendments and new clauses. I noticed that the Minister said that, reluctantly, it was not possible to deal with all the issues. However, it seems that the Government have been pushed into a situation of coming up with a half-way house. To some extent, we discussed the issue vaguely in Committee, but the Bill has been round the houses five times. I am surprised that the Minister is not able to come forward with something that deals with the problem more effectively.
	The Government could have done better. Despite the Minister's remarks about new clause 19, it is my belief that that clause is better than the measure that the Government are proposing. The Minister mentioned that the Law Commission is at an advanced stage of coming up with comprehensive proposals.
	A cause of great concern has been whether, for example, there would be any reasonable substitution for forfeiture where, for example, premises were being used for prostitution or for other illegal activities such as drug dealing. The issue is not whether we like forfeiture but whether it is appropriate in all the circumstances. It is our view that forfeiture is not appropriate in respect of non-payment of money or service charges.
	The basic principle is that if a tenant breaches the terms of his or her lease, the landlord can forfeit the lease. The landlord can repossess the property and either sell it or rent it out to someone else. Where the tenant has a long lease at a low rent, the landlord ordinarily receives a considerable windfall. As I stated in The Daily Telegraph yesterday, the law is now more complicated than the simple equation of breach equals forfeiture. It is necessary to distinguish between two quite different regimes that apply. The first regime is where a tenant fails to honour some obligation to pay money. The second is where the tenant breaks some other non-pecuniary obligations under the lease.
	With the second case, a landlord who wishes to forfeit must first serve what is colloquially called a 146 notice, under the Law of Property Act 1925. The notice must specify the breaches alleged and give the tenant a reasonable to time remedy the breaches insofar as they are remediable. Even if the tenant has not performed the remedies of the breaches within a reasonable time, he or she can still apply to the court for relief against forfeiture. My amendment is concerned only with non-payment of money and has no impact on the other forms of breaches. I shall explain why.
	I turn to the first case, where the breach consists of non-payment of money. In this instance, equity has always treated the provision for forfeiture as being simply security for the payment of sums due. That means that if the tenant pays the moneys due, the court will grant relief from forfeiture so that the tenant does not lose the flat. A tenant can, within reason, even apply for relief from forfeiture after the landlord has repossessed the property.
	In practice, it often happens that the tenant's mortgage company steps into the breach and pays off the arrears owing to the landlord. The reason is simple. If the landlord forfeits the lease, the mortgagee loses its security because the lease which is charged to the bank or building society ceases to exist. This is a highly effective way of obtaining payments of rent and service charges from tenants. It is right that there should be an effective way of obtaining payment of those moneys. In particular, in connection with service charges, every sum of money which one tenant escapes paying is money which other tenants will have to pay.
	The issue is not whether there should be a strong means of enforcement of tenants' obligations. There should be. That may be a point of distinction between Opposition and Government. The issue is whether forfeiture is the right way to go about it. I mentioned that the amendment is not concerned with forfeiture for breach of non-pecuniary obligations. The reason is that there are circumstances in which it is right that a lease should be forfeited. Suppose the tenant uses his flat for drug dealing. In such a case, the landlord and other tenants must have a right to throw out the offending tenant.
	In principle, the right to forfeit should exist in at least some cases; whether in all cases, as at present, might be doubted. It is likely that improvement can be made on the current law of forfeiture. We know that the Law Commission is considering that. The question is whether the Government have come forward with enough, despite the fact that they have been harried by us and by others, including Labour Back Benchers, into coming to a conclusion. They have been making a case—I think that it probably goes too far—for the abolition of forfeiture in all instances. The same applies to the Liberal Democrats. We are trying to strike a reasonable balance to ensure that there is a degree of proper remedy available for the non-payment of money and service charges.
	We recognise that this is a complicated area. We will not go into the question of forfeiture other than for non-payment of money or service charges.
	The position is quite different in the case of non-payment. Here all the parties are interested in is money. The main objection to the current law is that it allows landlords to make large windfall gains, as it is insufficiently flexible. As the Minister said and as I pointed out in The Daily Telegraph, there may also be threats and the accumulation of expensive correspondence. The situation may be exploited, and people may be put at a disadvantage and at risk.
	If a tenant falls into arrears with rent and service charge, the landlord can repossess the property. When the tenant is living in the property that requires a court order, but the court has no discretion in regard to whether to order possession, it can only delay eviction by a short time. Arrears equal eviction. We do not agree with that.
	The consequences of forfeiture are eye-opening. We want to preserve a proper balance in the interests of the many millions of people who could well be affected. We know that more than 3 million people hold long leases at what is probably a low rent—a considerable number of people who vote for all parties.
	Under forfeiture, the landlord recovers vacant possession of the property. He can then sell a new long lease on the flat at full market value. It makes no odds that the tenant may owe only a few thousand pounds, or even less; the landlord repossesses, and can then sell the flat for possibly hundreds of thousands of pounds. To add insult to injury, the landlord does not even need to give the tenant credit for the service charges for which the landlord was able to forfeit. Not only does the landlord collect the full capital value of the flat; he can carry on enforcing the arrears.
	We think that that goes much too far. Yes, there must be an efficient way of enforcing ground rents and service charges, but there is no need to give landlords such massive windfall gains. We do not think that abolishing those gains would pose any human rights problem.
	The Government's amendment does not deal with our complaints. It merely tampers with forfeiture in a way that we believe will lead to the worst of all possible worlds. It sounds well and good to say that forfeiture shall not be permitted for sums under £500. It might be said that obviously it should not be permitted for trivial sums. The amendment, however, removes any cost-effective remedy for the recovery of small sums due from tenants to landlords. The only remedy a landlord will have is to go to the small claims court to enforce his claim against the tenant. He will then have the bother of enforcement through the county court bailiffs, which is notoriously ineffective. Charging order proceedings would be wholly disproportionate, and the landlord will have no claim against the mortgagee.
	This is what will happen in practice. Tenants will realise that they are effectively bullet-proof up to the sum of £500. Landlords will not bother to collect such sums. Mortgagees will feel under no obligation to pay such small arrears, because it will not affect their security. Once again, honourable tenants who pay their service charges in full will be subsidising dishonourable tenants who bilk their obligations. The Government's proposals may strike some as rational and tenant-friendly, but any more detailed consideration shows them to be gravely defective.
	So what is the way forward? Our amendment picks up the equitable rule that landlords are entitled only to security for moneys owed to them. It substitutes a charge over the lease for non-payment of money for the right to forfeit. That would have two advantages. First, the landlord recovers only what is owed to him, receiving no windfall at the tenant's expense, and secondly the court has well established powers to allow debtors to pay off secured moneys without losing their homes.
	New clause 19(1) limits the proposal to long leases at a low rent. This is where the problem lies. Where leases are short or granted for a market rent, it is only right that a landlord should be able to repossess for non-payment of rent. By contrast, it should make no difference whether the lease is residential, business or agricultural. If the lease has a capital value, forfeiture should give way to a system that recognises that capital value.
	Subsection (2) defines what is meant by forfeiture. Subsection (3) abolishes forfeiture for non-payment of money. The new clause gives the landlord a charge over the lease, which extends to anyone owed money under the lease. That is designed to deal with the common situation in which service charges, for instance, are payable to a management company rather than a freeholder.
	Subsection (5) is central to the workability of the proposal. At present, as I have explained, the tenant's mortgagee has an incentive to pay the arrears in order to avoid forfeiture. That will continue under these proposals.

Shona McIsaac: I think the hon. Gentleman's proposal is flawed. He keeps referring to mortgagees. Many people who are threatened with forfeiture have paid off their mortgages. They may be threatened with forfeiture because payment of a £5 annual ground rent is late. The hon. Gentleman has not addressed that issue of threat, which I think would be addressed by a de minimis level of £500.

William Cash: In the circumstances, we shall simply have to disagree. I want to get on so that others can speak.
	Up to now, underlessees have had either to pay up or to lose their leases. That will continue. Subsection (5) ties in with subsection (11), which provides for mortgagees and underlessees to come in and pay off the arrears. In turn, those subsidiary interest-holders will take over the landlord's charge from the landlord.
	I have spoken at some length because this issue is important to the lives of many people throughout the country. Let me finally say that forfeiture for arrears of rent and service charge is a remedy whose time has passed. It is savage and unnecessary. The Government's proposals do not improve the workings of forfeiture; they worsen them. We propose something better.

Brian Iddon: New clause 3 would abolish the forfeiture of leases. Amendments Nos. 26, 27 and 28 are identical to amendments I tabled in Committee, but agreed to withdraw in order to give the Government more time to consider them before Report. When I went to the Public Bill Office to re-table them, I found that the hon. Member for Torbay (Mr. Sanders) had pipped me at the post. New clauses 6 and 8, which relate to compensation, would fall if the Government accepted new clause 3 and amendments Nos. 26, 27 and 28.
	I am surprised that this was not a big issue in the other place. It was hardly discussed, if indeed it was discussed at all. It has, however, been a big issue here, both in Committee and on Report. I am disappointed that, at 8.38 pm, we still have a huge batch of amendments and new clauses before us. I must criticise the hon. Member for Stone (Mr. Cash) for delaying the proceedings, just as he did on Monday. This should have been the major debate of the day, as it relates to an issue that is extremely important to people out there. I am pleased that the Minister and the Government have been listening. I thank the Minister for tabling the amendments, which will make it far more difficult to proceed along the route of forfeiture. Nevertheless, the threat of forfeiture is still there. I would have liked it abolished completely.
	I hear what the hon. Member for Stone and the Minister say about the reasons other than financial reasons for having forfeiture on the statute book, but if someone is running a house of disrepute or a person in a block of flats is selling drugs, what has happened to the police? There are other ways of dealing with those problems—they may be dealt with through the courts and the judicial process. That is not an excuse for maintaining forfeiture.
	We have had a lot of lobbying on the issue, which has been around a long time. The Minister mentioned the Law Commission. It has been examining the subject for more than 17 years. It knew that the Bill was coming to this place. Almost as soon as the Government got in, there was talk about the Bill. There was plenty of discussion on the draft Bill. Indeed, in December 2000, the Government published the results of the consultation on the draft Bill. Paragraph 12 of that document states:
	"We accept the need for effective sanctions against defaulters but we do not believe it is right that a landlord can gain a windfall profit by obtaining absolute possession at the expense of the leaseholder. Instead we propose that where the landlord obtains possession the leaseholder should be compensated for the loss of his interest after deducting moneys owed to the landlord."
	I do not believe that anyone in the House tonight and in the other place could argue that it is natural justice if a person pays off a mortgage for a flat in Camden worth £350,000—I cited the case in Committee—the landlord goes along the route of forfeiture, wins the case and the leaseholder of the flat loses the entire amount of £350,000. Can anyone in this place or in the other place claim that that is natural justice?
	I will not push my new clauses in relation to forfeiture because I think that we will come back to that issue. Indeed, the Minister has promised to come back to it. I ask her how long it will be before the Law Commission comes up with the lengthy proceedings that it has debated for more than 17 years. Can she assure us that we will get a Bill very soon on that subject? It is a crucial matter.
	I am prepared to let that ride until the relevant Bill is introduced, but I am not prepared to accept that forfeiture should remain on the statute book and that a person can lose such vast sums of money as the sum that I have just mentioned. I am afraid that I am minded to press the case for compensation, because that is natural justice.
	I cannot believe that this is as complicated as the Minister said it was. It seems such a simple issue. If a person has gained a large sum of money, highway men should not rob them of it. If the judicial system cannot get its act together within a few weeks or even a few months and sort that one out, people should be compensated.
	I am aware of the time. I had a lot more to say but I shall finish on the following point. I am grateful to the Government for introducing the Bill, which has made huge strides. It is a good Bill and on the whole I am very supportive of it; but it could have been a Rolls-Royce Bill if many of the issues that have been around for a long time had been addressed properly. Abolition of forfeiture is one of them but, more important, compensation when that happens is critical.

Adrian Sanders: There is no doubt that the amendment improves the Bill but it still keeps forfeiture on the statute book. It is therefore necessary to press new clause 3.
	As the Minister has admitted, the Government have recognised the unfairness of the use of forfeiture for the collection of debt, because in the case of commonhold units there is a provision preventing a right to forfeiture. The issue for leaseholders is that, where forfeiture of a long lease occurs, particularly for the non-payment of ground rent or service charges, the landlord will obtain benefit that is wholly disproportionate to the breach. Its existence enables landlords to practise a wide variety of abuses. It encourages unreasonable charges, because landlords know that they have the final sanction in order to secure them.
	Leaseholders have felt reluctant to challenge unreasonable charges for fear of losing their homes, and because it is the lessee who has to pay the costs of obtaining relief against forfeiture.
	Strict time limits are imposed, and these can often be missed. The fact is, good landlords do not need forfeiture, as owed moneys can be reclaimed through normal debt recovery procedures. The fact that forfeiture exists goes against natural justice. It appears archaic in the modern legal context, which is supposed to seek a fairer balance of the rights of individuals at law, and it helps to perpetuate the discredited reputation of leasehold tenure—one of the factors behind the Bill.
	A lease can be drafted so that service charges are described as being
	"by way of further rent."
	That means that freeholders can issue legal proceedings without the necessity of having the service charge dispute resolved.
	Forfeiture is a one way street, heading in the landlord's direction. If a tenant refuses to pay ground rent because, for example, a roof is faulty, he can be faced with losing his home. If the home is lost, the "homeless" leaseholder is not compensated for his loss, following the sale of "his" property.
	The Government will say that forfeiture is used only rarely, as the Minister noted earlier. It could therefore be argued that it is unnecessary to keep it on the statute book at all. A Conservative Member said, in Standing Committee, that forfeiture was akin to state-sanctioned theft. That summed the matter up.
	Forfeiture is not appropriate in modern property management. For long leases, it could be abolished straight away, as the law provides other mechanisms for recouping moneys owed. The threat of losing one's home is out of proportion to the scale of debt, and causes a vast amount of distress. It is a punishment that far outweighs the crime.
	Liberal Democrat Members are not able to support the Government amendments, even though they are an improvement, as they do not address the principle. That principle is forfeiture, and it must go.

David Lepper: I welcome the Government amendments, which go some way towards removing the central abuse involved in forfeiture. That abuse was not necessarily the loss of a home, which happens relatively rarely, as has been acknowledged. The main abuse of forfeiture has been the fear factor, which has threatened tenants and leaseholders for so many years. Indeed, it would be hard to pick an aspect of leasehold that more clearly represents the feudal relationship that exists between freeholder and leaseholder.
	I am pleased that the Government have introduced proposals that will go at least some way to removing the freeholder's right to use the blunt instrument of forfeiture. The term "blunt instrument" was used by Peter Haler, the chief executive of LEASE, in a letter to me picking up some comments of mine on Second Reading. He wrote:
	"Whilst it is quite correct that relatively few cases of forfeiture are enforced by the courts, the present archaic law provides opportunities for mischief by some landlords, and this is a major cause of concern for us."
	He added:
	"what we find reprehensible is the use of the forfeiture procedure as a blunt instrument to harass leaseholders."
	The Government have recognised that. However, the Labour Opposition before the 1997 election carried out extensive consultation about leasehold reform and the introduction of commonhold. I am not sure that the Law Commission has been considering the matter for 17 years, as my hon. Friend the Member for Bolton, South-East (Dr. Iddon) said, but an answer from my hon. Friend the Parliamentary Secretary, Lord Chancellor's Department on 11 March suggested that it had brought forward a draft Bill on the matter in 1994.
	Reform of the leasehold laws has been discussed for many years. I therefore find it hard to understand why, with only 10 minutes or so to go before the last stage of voting on the Bill, insufficient thought has been given to including in it provisions for the abolition of forfeiture, and for compensation.
	I am one of the vice-chairs of the all-party group on commonhold and leasehold reform. In our submission to the Government at the earlier stage of consultation on the draft Bill, we welcomed their desire to curb abuses of forfeiture. We went on to say, as a cross-party group, that forfeiture should be abolished. Such debts should be handled primarily through the small claims courts and ultimately it should be possible to force a sale of property to pay a debt. However, the balance of funds after settlement of the debt should revert to the leaseholder.
	I am realistic enough to see that there is no hope of the new clause to abolish forfeiture succeeding this evening, but I hoped that the Government would accept the principle of compensation. I note what my hon. Friend the Minister says about intending to deal with compensation at a later date, which takes me back to my earlier points about the time scale. For those reasons, I will be supporting my hon. Friend the Member for Bolton, South-East this evening.

Sally Keeble: We have had an important discussion this evening on an issue of major concern to hon. Members on both sides of the House. I share the concerns of my hon. Friend the Member for Bolton, South-East (Dr. Iddon); our earlier discussions about some small, technical amendments have meant that the amount of time available for debating this matter has been curtailed. It is a matter of great importance, because it is a principle and because of the serious practical consequences arising from measures in the Bill.
	We have listened carefully and sought to strike a fair balance. We all recognise the need to protect vulnerable leaseholders from oppressive behaviour by unscrupulous landlords and from threats and bullying. However, there is also a need to protect responsible landlords and other leaseholders and to make sure, at this late stage, that there are proper orderly arrangements in place for people's homes, and that includes financial arrangements.
	The hon. Member for Stone (Mr. Cash) was muddled in his thinking. He has recognised throughout the Bill's proceedings that the ultimate sanction is the termination of the lease, which is a factor in leasehold arrangements. However, he has not carried through the logic of his argument, for purely party political reasons, I suspect, and not because he is thinking carefully about the best arrangements for leaseholders. New clause 19 does not provide an orderly alternative for sanctions for non-payment of the lease. Given that the hon. Gentleman is presumably trying to present it as a credible alternative, I am astonished that he has not even attempted to discuss his proposal with the Council of Mortgage Lenders.
	I recognise the consistent concerns expressed on this issue by hon. Members, including in particular my hon. Friend the Member for Bolton, South-East and the hon. Member for Torbay (Mr. Sanders). They have raised these concerns on Second Reading and in Committee, and have pressed the issue in various discussions. The Law Commission is due to come back in the spring or summer of this year and produce a draft Bill in time for the 2002–03 Session. I realise that it has been a long time in coming, but the Law Commission has got a long way down the road and is very near to concluding its work.
	I point out to the hon. Member for Torbay and to my hon. Friends the Members for Bolton, South-East and for Brighton, Pavilion (Mr. Lepper) that I clearly stated the Government's intention and the principles set out by my Department on the removal of forfeiture and a fairer regime for leaseholders. However, it was not possible—especially at the stage when the measure came to this place—to set up a system that would replace the current regime. We have listened—

Lynne Jones: Will my hon. Friend give way?

William Cash: Will the hon. Lady give way?

Sally Keeble: We have all been extremely tolerant of the hon. Gentleman, but I intend to close my remarks—

William Cash: The Minister is being patronising.

Sally Keeble: Perhaps the hon. Gentleman is being patronised for the first time in his life.
	I shall give way to my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones).

Lynne Jones: I thank my hon. Friend as I have not yet had an opportunity to intervene.
	Is my hon. Friend actually saying that the Government—with all the resources that they have at their disposal—intend to put the matter off for a future legislative opportunity that may well not occur? We know about the pressure on the legislative programme, so surely now is the time to deal with these matters.

Sally Keeble: The entire debate has turned on those points. We have listened carefully. We have taken on board the points that were made. My hon. Friend herself referred not to the ending of forfeiture but to some of the safeguards that have been set up because it was not possible to come up with a workable system within the time constraints. We have come forward—

William Cash: Will the hon. Lady give way?

Sally Keeble: No, I do not intend to give way. I have made it clear that I do not intend to give way. We have spent a large amount of time listening to the hon. Gentleman during the two days of debate on Report.
	We have drawn up the most stringent safeguards and protections consistent with orderly arrangements for people's homes. We also have to consider carefully the financial arrangements for people's homes. That is why—even at a late stage—I asked officials to discuss the proposals made by the hon. Member for Stone with the Council of Mortgage Lenders. We take seriously the need to protect and safeguard people's homes.
	My hon. Friend the Member for Brighton, Pavilion rightly raised concerns not only about the impact of forfeiture but about the threat to vulnerable leaseholders, especially the elderly. Those issues are dealt with by our amendments. A comprehensive range of measures will oblige freeholders to go through a two-stage legal process before they can even begin to consider forfeiture. A variety of safeguards will be provided to ensure that leaseholders are thoroughly informed of their rights and have the opportunity to deal with all the issues. There is a de minimis level so that people do not lose their homes over a small amount of money. We have provided for further safeguards and protection through secondary legislation so that hon. Members can be consulted and can debate the issues.
	Together, those measures will provide a real charter to safeguard leaseholders. Although we have not been able to set up the compensation arrangements that we discussed on many occasions, the Government have produced some workable proposals and amendments to safeguard leaseholders and to ensure that there are proper sanctions for non-payment, consistent with good property management. Those measures will also ensure that the cases raised by hon. Members on Second Reading and in Committee are a thing of the past and that we do not hear of such things again. So I urge hon. Members to support the Government amendment, which will do a very real service for the millions of leaseholders throughout the country.
	Amendment agreed to.

Mr. Deputy Speaker: In the light of the debate, I am prepared to allow the House to divide on new clause 3 and new clause 19 if that is desired.

Brian Iddon: On a point of order, Mr. Deputy Speaker. I should like the House to divide on new clause 8.

Mr. Deputy Speaker: Is the hon. Member for Torbay (Mr. Sanders) happy with new clause 8? I shall not allow Divisions on lots of new clauses.

Don Foster: Further to that point of order, Mr. Deputy Speaker. Perhaps you could explain to the House whether it would be possible to combine new clause 3 with new clause 8. I understand that that would not be possible, and we would therefore wish to press new clause 3 to a Division.

Mr. Deputy Speaker: In that case, the House will divide on new clause 3.

John McDonnell: Further to that point of order, Mr. Deputy Speaker. May I ask you to reconsider your decision not to select new clause 8? We are dealing with two distinct issues, the first of which is the abolition of the forfeiture altogether and the other relates specifically to compensation. They involve two distinct principles, so I urge you to consider allowing Divisions on new clause 3 and new clause 8.

Mr. Deputy Speaker: It is for the occupant of the Chair to decide such matters, and I will so decide.
	It being after Nine o'clock, Mr. Deputy Speaker pursuant to Orders [31 January and 11 March], put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

New Clause 3
	 — 
	Abolition of forfeiture

'A right of re-entry or forfeiture under any proviso or stipulation in a lease of a dwelling for a breach of covenant or condition in the lease shall not be enforceable by action or otherwise.'.—[Mr. Sanders.]
	Brought up, and read the First and Second time.
	Motion made, and Question put, That the clause be added to the Bill:—
	The House divided: Ayes 48, Noes 278.

Question accordingly negatived.

Mr. Deputy Speaker: I understand that the hon. Member for Stone (Mr. Cash) wants to divide on new clause 19.

New Clause 19
	 — 
	Leases exceeding 21 years

'.—(1) This section shall apply to any lease granted for a term of years certain exceeding 21 years, whether or not it is terminable before the end of the term by notice given by or to the tenant or by re-entry, forfeiture or otherwise and whether made before or after the coming into force of this section, where the rent reserved for the time being is less than £1,000 per annum.
	(2) In this section a right of forfeiture shall mean a provision in a lease whereby the landlord under a lease has a right to re-enter the premises demised (or part thereof) upon the happening of specified events, whether the right to re-enter is expressed as a condition or as a proviso on breach of covenant or otherwise howsoever.
	(3) No landlord may re-enter the premises demised (nor any part thereof) pursuant to a right of forfeiture, insofar as the exercise of the right of forfeiture is based on the non-payment of money.
	(4) Where a tenant fails to pay monies payable under the terms of the lease, the person entitled to payment of the said monies shall be entitled to a first legal charge (herein referred to as a "landlord's charge") over the lease for the monies payable and for his reasonable costs and expenses of and in connection with the landlord's charge and the enforcement thereof, such costs and expenses to be payable on the indemnity basis.
	(5) Subject to the next subsection, a landlord's charge shall have priority to all charges, underleases and other encumbrances estates easements estoppels and rights of whatever description created by or deriving title from or through the tenant, whether at law or in equity and whether created or existing before or after the coming into force of this Act (hereinafter referred to as "subsidiary interests").
	(6) Notwithstanding the previous subsection, no local land charge within the meaning of the Local Land Charges Act 1975 shall be a subsidiary interest.
	(7) Subject to the next subsection, a landlord's charge may be enforced in any manner in which a first legal charge may be enforced.
	(8) The landlord's charge may only be enforced by sale with leave of the High Court or the County Court.
	(9) On such a sale, the purchaser shall purchase free from all subsidiary interests.
	(10) Where a landlord's charge has no reasonably realisable commercial value, the landlord may apply to the High Court or the County Court for an order terminating the lease, but such an order shall not release the tenant from any pre-existing obligation under the lease.
	(11) Any person holding any subsidiary interest shall be entitled to have subrogated to him the landlord's charge on payment of the sums secured by the landlord's charge and shall be entitled to add his reasonable costs and expenses of and in connection the said exercise of the right of subrogation to the landlord's charge, such costs and expenses to be assessed on the indemnity basis.
	(12) Where more than one person holding a subsidiary interest wishes to have subrogated to him the landlord's charge, the priority as between such persons shall be determined in accordance with the rules of equity.
	(13) Where on a sale of the lease pursuant to subsection (8) hereof, there is a surplus after payment of all the monies secured by the landlord's charge, the distribution of the said surplus shall be made in accordance with the rules of equity.
	(14) Rules of Court shall provide for service on the tenant and on persons holding subsidiary interests of any application made pursuant to subsection (8) hereof for leave to enforce the landlord's charge by sale and for the circumstances in which such service may be dispensed with.
	(15) Notwithstanding the provisions in subsections (4) and (11) hereof permitting the adding of costs and expenses to the landlord's charge, the High Court and the County Court shall have the power to make in substitution for the said provisions some different order as to incidence, basis and amount of the costs and expenses of the holder of the landlord's charge and of the lessee and of any other person where such different order would be just.
	(16) The figure for the annual rental specified in subsection (1) hereof may be varied from time to time by regulations made by the Secretary of State.
	(17) Nothing herein shall affect the validity or effect of a forfeiture of a lease, whether by re-entry on or service of originating process seeking to re-enter the premises demised (or part thereof) or otherwise, effected before the coming into effect of this section.
	(18) "Lease" in this section shall include underleases and "landlord" and "tenant" shall be construed accordingly.
	(19) The existence or potential existence of a landlord's charge shall not prevent any person who is restricted or prohibited whether by statute or otherwise from lending money save on the security of a first legal charge from lending money on the security of a charge which, but for the existence or potential existence of the landlord's charge, would have been a first legal charge.'.—[Mr. Cash.]
	Brought up, and read the First and Second time.
	Motion made, and Question put, That the clause be added to the Bill:—
	The House divided: Ayes 151, Noes 286.

Question accordingly negatived.
	Remaining Government amendments agreed to.

New Clause 9
	 — 
	Failure to pay small amount for short period

'(1) A landlord under a long lease of a dwelling may not exercise a right of re-entry or forfeiture for failure by a tenant to pay an amount consisting of rent, service charges or administration charges (or a combination of them) ("the unpaid amount") unless the unpaid amount—
	(a) exceeds the prescribed sum, or
	(b) consists of or includes an amount which has been payable for more than a prescribed period.
	(2) The sum prescribed under subsection (1)(a) must not exceed £500.
	(3) If the unpaid amount includes a default charge, it is to be treated for the purposes of subsection (1)(a) as reduced by the amount of the charge; and for this purpose "default charge" means an administration charge payable in respect of the tenant's failure to pay any part of the unpaid amount.
	(4) In this section "long lease of a dwelling" does not include—
	(a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,
	(b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or
	(c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).
	(5) In this section—
	"administration charge" has the same meaning as in Part 1 of Schedule 11,
	"dwelling" has the same meaning as in the 1985 Act,
	"landlord" and "tenant" have the same meaning as in Chapter 1 of this Part,
	"long lease" has the meaning given by sections 76 and 77 of this Act, except that a shared ownership lease is a long lease whatever the tenant's total share,
	"prescribed" means prescribed by regulations made by the appropriate national authority, and
	"service charge" has the meaning given by section 18(1) of the 1985 Act.'.—[Ms Keeble.]
	Brought up, read the First and Second time, and added to the Bill.

New Clause 10
	 — 
	Power to prescribe additional or different requirements

'(1) The appropriate national authority may by regulations prescribe requirements which must be met before a right of re-entry or forfeiture may be exercised in relation to a breach of a covenant or condition in a long lease of an unmortgaged dwelling.
	(2) The regulations may specify that the requirements are to be in addition to, or instead of, requirements imposed otherwise than by the regulations.
	(3) In this section "long lease of a dwelling" does not include—
	(a) a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies,
	(b) a tenancy of an agricultural holding within the meaning of the Agricultural Holdings Act 1986 (c. 5) in relation to which that Act applies, or
	(c) a farm business tenancy within the meaning of the Agricultural Tenancies Act 1995 (c. 8).
	(4) For the purposes of this section a dwelling is unmortgaged if it is not subject to a mortgage, charge or lien.
	(5) In this section—
	"dwelling" has the same meaning as in the 1985 Act, and
	"long lease" has the meaning given by sections 76 and 77 of this Act, except that a shared ownership lease is a long lease whatever the tenant's total share.'.—[Ms Keeble.]
	Brought up, read the First and Second time, and added to the Bill.

New Clause 11
	 — 
	Notice to accompany demands for service charges

'After section 21A of the 1985 Act (inserted by section 151) insert—
	"21B Notice to accompany demands for service charges
	(1) A demand for the payment of a service charge must be accompanied by a summary of the rights and obligations of tenants of dwellings in relation to service charges.
	(2) The Secretary of State may make regulations prescribing requirements as to the form and content of such summaries of rights and obligations.
	(3) A tenant may withhold payment of a service charge which has been demanded from him if subsection (1) is not complied with in relation to the demand.
	(4) Where a tenant withholds a service charge under this section, any provisions of the lease relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.
	(5) Regulations under subsection (2) may make different provision for different purposes.
	(6) Regulations under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.".'.—[Ms Keeble.]
	Brought up, read the First and Second time, and added to the Bill.
	Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified.]
	Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Spellar.]

Michael Wills: It is usual at this stage of progress of a Bill to thank those who have scrutinised it in Committee, and that is a convention that I am very happy to observe on this occasion. As the hon. Member for Stone (Mr. Cash) said before he began his marathon efforts on the first day of consideration on Monday, the content of the Bill has been considered in very great detail, both in this House and, because of the timing of the general election, twice on Second Reading and in Committee in the other place. Progress has been mostly good-natured, and important contributions have been made to improve what was already a good Bill.
	It is, of course, disappointing that, despite having logic and reason on our side, it has not proved possible for us to persuade Opposition Members of the underlying wisdom of the 100 per cent. rule or the even-handedness of the Bill's approach to marriage value. Nevertheless, the Government have been open to constructive criticism and assistance from both sides, inside and outside Parliament, and the Bill has undoubtedly been improved by the efforts of Members in both Houses. I hope that Opposition Members and indeed my hon. Friends will feel able to agree that although the final product that we shall send back to the Lords may not be all that they wanted, it is still a very good Bill.
	First, and perhaps most important, the Bill introduces two entirely new concepts into the law relating to land. The no-fault right to manage in part 2 will give leaseholders who wish to employ it a right to make arrangements for the management of their homes. They will not have to prove that their landlord is in default of any of his duties, neither will they have to buy out his or her interest. At a stroke, that right will address many of the problems faced by many leaseholders.
	The other new concept is, of course, commonhold. We have been criticised for not calling a halt to new leasehold developments and imposing commonhold as the new exclusive standard. We know why that has been suggested and we are not without sympathy for that point of view, but we have explained at length why we cannot go as far as that. None the less, we believe that commonhold could speedily take its place in the market as a robust alternative to long leasehold and we firmly expect that, over time, as people gain confidence in the scheme, it will supplant leasehold without the need for the Government meddling in the market, with all the possible unintended consequences of that.
	The detailed consideration of the proposals in both places has helped to develop a scheme that will be practical, easy to use and therefore popular. Part 2, having introduced the right to manage, goes on to liberalise the right of collective enfranchisement. More leaseholders in many more properties will be able to take advantage of enfranchisement.
	Once the Bill receives Royal Assent, as we hope it will, there will be much work to do publicising the new schemes that it introduces. The Lord Chancellor's Department and the Department for Transport, Local Government and the Regions believe in the Bill. It has been in successive manifestos and, as an earnest of the Government's commitment, it was reintroduced at the earliest opportunity after the last election. Plans are already in hand for making the contents better known and the advantages to all those whom it could affect widely realised. We shall promote it through many channels.
	If, regrettably, some still believe that the Bill falls short of perfection, we are convinced that most, including Members on both sides of each House, recognise it as a great step towards freeing leaseholders of the worries to which the current long leasehold system can give rise if its management is left in the wrong hands. This is a great step towards the ultimate goal, which I hope everyone in the House can support, of secure home ownership.

William Cash: I concur with the Minister in saying that the Bill is a step forward, and I am extremely glad to be able to say that we have played a constructive part in the proceedings. The Bill has been through the best part of six stages, and we have covered an enormous amount of ground. If there were one or two harsh words towards the end of the proceedings, we can put them behind us now. We are glad that the Bill will go on to the statute book, but we still have a number of reservations.
	First, as the Minister has just said, we have doubts about the unanimity rule. As I said in a letter to The Daily Telegraph yesterday, that will render the Bill largely unworkable. In fact, it will mean that its application will be confined largely to new developments. Time will tell. It is astonishing and a great shame that the Government should have stuck doggedly to something as indefensible, to our minds, as the unanimity rule. In a large block of flats, it will be almost impossible to get agreement across the board.
	I happen to know that many Labour Members share that view. They may not has been as vociferous in the subsequent proceedings on the Bill as in the heat and fury that we saw on Second Reading, but I appreciate that the power of the Whips is all-pervasive. The pungent whiff of the crack of the whip gave me the impression that Labour Members had even faltered a little on forfeiture as well. However, the arguments have been deployed, and it is important in the House that we deploy arguments as well as voting on them.
	There are other matters that other hon. Members will want to address, and I do not propose to say any more except to thank those in the various Departments who helped to put the Bill together. I am grateful also for the advice that we received from the Law Society and distinguished members of the Chancery Bar. These are complicated matters, and the Bill is technical. Proceedings on it have been good natured, and it is a step forward. It may be a faltering step; there is no reason why a few more things could not have been sorted out but, as they have not, we should be content with the Bill's progress and look forward to a time when further improvements can be made: we shall be glad to support them if they are in line with our thinking.

Brian Iddon: It is a privilege to serve as a Member of Parliament and to contribute to proceedings on the Bill. I should like to place on record my thanks to both Ministers for listening to those of us who fought a few battles during the passage of the Bill.
	I became interested in the Bill because of my concern about nominated insurance. Many people in my constituency wrote to me, upset at being forced by the Compton Group to get insurance with Axa Insurance. Provisions on the issue were not included in the draft Bill that was originally submitted to the House. The Ministers listened to us and we now have a Bill that, when enacted, will make nominated insurance companies illegal. I thank both my hon. Friends for listening to us and bringing about that change.
	A big chunk of the Bill deals with the introduction of commonhold and the right to manage. The 100 per cent. rule will be tested; I wish commonhold well, even with that rule. If it does not work, we can return to the subject. However, I hope that commonhold works with the 100 per cent. rule because as the Parliamentary Secretary has said more than once, it will simplify things tremendously.
	Leasehold remains as a form of tenure, although I believe that the sun will set on it one day. We wanted a sunset clause on that in the Bill, but did not get one. Marriage value, a fairly recent concept, is still present, but I am sure that we will return to it. Forfeiture has been the big battle for me in recent weeks. I thank the Ministers for listening to us in our meetings with them.
	Despite my mild opposition this evening, we have made much progress on forfeiture. It will be much more difficult for freeholders and landlords to take people down that route, and I am grateful for that. However, I urge my hon. Friends to look at the figure of £350, which is not a lot in London. Many people in London are subjected to forfeiture for sums that that figure would not catch.
	Finally, I am sorry that we were not allowed to discuss compensation tonight. I do not blame the Chair, who obviously made the right decision. If we had gone into the Lobby, there would have been considerable support. I thank the Minister for listening to what we said about compensation. Finally, I urge her to submit a draft Bill to the House in the next Session. I look forward to its introduction, and hope that I can see it through the House during my time here.

Adrian Sanders: The high hopes of many leaseholders have probably not been met by the Bill although, importantly, commonhold and the right to manage have both been established. In some respects, rights to enfranchise have been advanced. However, the Bill will be judged on what it omits, not what it includes.
	The Campaign for the Abolition of Residential Leasehold wanted five things to be included in the Bill: the introduction of commonhold, which it got; the abolition of residential leasehold, which it did not get; the automatic right to transfer from leasehold to commonhold, which it did not get; the transfer of tenure at a fair price, which is not covered by the Bill; and special measures for people unable to transfer, which are not in the Bill. CARL therefore achieved only one of its five aims. Liberal Democrat Members did better with our aims. While we failed to achieve the abolition of marriage value, forfeiture and the 100 per cent. consent to commonhold, we got the right for leaseholders to choose their insurance and recognition of estate management schemes; two out of five is not bad.
	Nevertheless, for tens of thousands of leaseholders, the prospect of enfranchisement is no closer. We wish commonhold well. We have said throughout proceedings on the Bill that we support the concept. We want it to succeed and we hope that it will. We also hope that we can return to some of the unfinished business of the Bill—marriage value, forfeiture and, later, if our fears are realised, the 100 per cent. consent required for commonhold.
	Our time in Committee was enjoyable. The proceedings were conducted mostly with good humour and in a non-partisan way, with one or two exceptions. I must state on the record that not once during the passage of the Bill did I fall asleep. Despite the best efforts of some hon. Members, I stayed awake at all times.
	I thank the Public Bill Office for its help. That is a resource of the House that is not often mentioned, and the help provided by its staff in preparing amendments is fantastic.
	We wish the Bill success. We want more people to take more control over their lives. However, we will need to return to some of the unfinished business, which has been around for more than 100 years.

David Lepper: I add my appreciation to that already expressed to my two Front-Bench colleagues, despite comments made earlier in the evening. The past couple of weeks have shown the extent to which Back Benchers in all parts of the House can still influence the course and the content of Government policy. Although we may not have influenced the Bill as much as some of us may have wished, it shows that Back Benchers can influence the outcome of debates on important policy issues.
	I particularly welcome the right to manage, which the Bill introduces. In my postbag, bad management remains the single biggest leasehold issue that I deal with. I look forward to the draft Bill on forfeiture that was promised by both Ministers for 2003. I also look forward to the results of the consultation that I believe is taking place on an issue that is not part of the Bill: the regulation of managing agents. I thought that it should be part of the Bill, but at least the Government are consulting on it.
	The right to manage is one thing, but the next step is to make sure that managing agents, whoever they are employed by, behave in a reasonable, responsible and trustworthy way. I recommend the voluntary scheme operating in the Brighton and Hove city area through the combined efforts of the city council, LEASE, the Brighton, Hove and District Leaseholders Association and the Association of Residential Managing Agents. That model could be adopted throughout the country.
	Finally, I place on record two other votes of thanks. The first is to the Brighton, Hove and District Leaseholders Association, which during the passage of the Bill, particularly in Committee, kept many hon. Members better informed than they were before about leasehold. The second is to my right hon. Friend the Minister for Local Government, who for so many years kept leasehold alive as an important policy issue in my party and in the country at large.

John Taylor: Before we all drown in self-congratulation, I have a lament that resonates back to Committee. I am old enough to have been a young, newly qualified solicitor in 1967, when the Leasehold Reform Act came in, which first enabled long leaseholders of houses to acquire their freehold reversions. I remember my wise late senior partner saying to me, "Aha! It's a good idea, but how are they going to work out the price?" He added, "The political community has once again funked the real issue, which is to tell people how much they can expect to pay." I grant that this is an arbitrary consideration, but I remind the House of the old adage, "It is not so important that the law be fair but that it be certain." Most people, including the constituents of the hon. Member for Cleethorpes (Shona McIsaac), cannot afford to take lawyers to the Lands Tribunal to argue about the price. They are entitled to a mechanism to work out what they should pay for their freeholds, so that they can know the price with some certainty and budget for it.
	Here we are 35 years later and the political community has funked the issue yet again. We have failed our constituents in this regard. [Interruption.] It is not for me but for the Government to resign. People make a great mistake when they think that the market will work the matter out. There is no market and people cannot shop around as there is only one potential seller of the freehold and only one buyer. One cannot go somewhere else as one might do to buy a pair of shoes. There is no market mechanism and people are entitled to assistance from their legislature on establishing a price. We have failed them.

Shona McIsaac: I was going to start my contribution by saying that the debate had at times been dry and technical, so I am grateful to the hon. Member for Solihull (Mr. Taylor) for yet again livening up our proceedings. I echo what he said: there is not sufficient clarity on how much people have to pay to purchase the freehold of their homes. The introduction of a pricing formula would help people to budget for the future. Indeed, I know of far too many constituents who, on finding out the cost of purchasing their freehold, say "I can't afford it; I'll put it off for a few years, because it is bound to get cheaper." Of course, the same assumption applies to many other purchases: for example, people know that an older car is likely to be cheaper. Often, they do not realise that freehold price will continue to grow as long as they put off the decision.
	We must get information to people and introduce some sort of price mechanism that is simple and easy to understand. After all, in spite of the dry and technical nature of some of our debates on the Bill, we are talking about people's homes—the most expensive purchase that most people will ever make. There are 2 million leasehold properties, with an estimated 3 million to 4 million residents. The issue is not esoteric, but affects every constituency in the country. That is why it was vital to introduce a Bill to reform leasehold.
	One aspect of the language that has been used in our deliberations is that leaseholders have been called "tenants"—an expression that I have never liked. We are talking about people's homes. They pay mortgages, and as such, they regard themselves as home owners in censuses. Indeed, in any application form that they fill in, perhaps for a bank loan, they will say that they are home owners. We must acknowledge what we sometimes forget in our debates: the passion that people feel for their homes and for owning them.
	Back in 2000, I was given leave to introduce a ten-minute Bill. I took the opportunity to make certain demands because, as I said at the time, I wanted to change the law to stop leaseholders being fleeced by unscrupulous landowners. I focused on families' rights in respect of purchasing their parents' homes after they had passed away, and the right to buy the freehold if the owners chose to extend the lease after it had expired. The Bill covers those matters. Indeed, the measure provides for more than I demanded then. For example, the provisions on insurance will give many people genuine protection in law from scams.
	The provisions on forfeiture are welcome. In my area, ground rents are low—in some cases, less than £10—and people are threatened with all sorts of penalties if that sum is paid even one or two days late. Threats of forfeiture have been used, and I therefore hope that the de minimis level of £500 means that those people will not be threatened again.
	The Bill introduces more clarity about service charges. I have already mentioned inheritance, but the measure includes welcome provisions on enfranchisement and lease extension. I understand that the latter will apply even to people who have already extended their lease. The measure will assist my residents; it is a step forward, and I welcome it.
	None the less, I shall continue to campaign for further reform because it was clear in Committee that we are considering a phenomenally complex area of law. We probably could have spent a year trying to sort out the complexities.

Adrian Sanders: No!

Shona McIsaac: That shows that the Liberal Democrats are not really committed to the matter.
	I hope that, perhaps through the draft Bill on forfeiture, we can create a level playing field for people who live in leasehold flats and houses. Those who live in leasehold houses would thus get the right of first refusal to buy the freehold should the landowner dispose of the leases. That would make freehold purchase far cheaper for millions of people.
	Like the hon. Member for Solihull, I want clarity on the purchase price of freehold. If abuses exist in my constituency, they concern purchase price. As I explained previously, it is wrong when one landowner asks for £2,000 and another, citing marriage value, for £20,000, for the freehold on identical properties. However, landowners get away with it because of lack of clarity. My hon. Friend the Minister said that she would like to consult on devising a mechanism whereby freeholders have to tell people how they determine a price. I would welcome that, and I am sure that she will hear from hon. Members, who, like me, will continue to campaign for further reform.
	I thank all hon. Members who served on the Committee. Our proceedings were good humoured, even when the hon. Member for Solihull discussed the movies of Alec Guinness. I cannot remember how that subject got into the debate, but it was entertaining. I also thank the Whips, despite the criticism of the hon. Member for Stone (Mr. Cash). I believe that allowing so many Labour Members who are interested in the subject to serve in Committee shows that the Government let people have a voice.

Bill Wiggin: I acknowledge with sadness the points that my hon. Friend the Member for Solihull (Mr. Taylor) and the hon. Member for Cleethorpes (Shona McIsaac) made. Although our proceedings have been illuminating and educational for me, it is a shame that Parliament's 81st attempt to reform leasehold leaves us with three sad deficits on freehold purchase, forfeiture and, perhaps most important, 100 per cent. unanimity.
	Without the efforts of the shadow Attorney-General, it would have been difficult to make as much sense of the Bill as he clearly did. His efforts were gigantic, and I pay tribute to him. He is certainly to be congratulated.
	Commonhold was to be the panacea for all the ills of leasehold tenure. By their insistence on unanimity, however, the Government have, staggeringly, neutered their own Bill. I am afraid, therefore, that we will be back for an 82nd attempt at reform, and it is a great shame that we have only tinkered with the edges of the problem.

Sally Keeble: I, too, express my gratitude to the many right hon. and hon. Members who have made such a lively and constructive contribution to the debates on the Bill. That includes the hon. Member for Stone (Mr. Cash), who has sometimes been a little curmudgeonly in his recognition of the Bill's merits.
	The Bill is a complicated piece of legislation, and many hon. Members have repeatedly said that it is dry and technical. However, its underlying objective is simple, as my hon. Friend the Member for Cleethorpes (Shona McIsaac) pointed out. It is to give people greater security in their homes, and we have achieved that in two ways: the introduction of commonhold, and providing more rights and safeguards for leaseholders.
	When people reflect on the discussions in Committee and the House, they will see that we have introduced a great number of substantial reforms. They include, for the first time, the right to manage. That will deal with many of the abuses that have been mentioned, without having to go to enfranchisement, which some people simply do not want to do. The Bill also opens up the right of collective enfranchisement to many more leaseholders, and denies landlords the opportunity that they have previously enjoyed to obstruct the enfranchisement process and to jack up leaseholders' costs.
	The Bill also tightens the requirements for safeguarding and accounting for leaseholders' money. It abolishes the requirement to use a nominated or approved insurer for leasehold properties, and extends the rights of personal representatives. It also introduces a whole package of reforms on forfeiture—perhaps not everything that everybody wanted, but they will dramatically reduce the scope for freeholders to abuse that process, and provide many more safeguards. These are major changes.
	The hon. Member for Torbay (Mr. Sanders) should take some comfort from these substantial changes because, in the real world outside this place, they will produce real changes to the life chances of many thousands of our constituents. The Bill has demonstrated how the House can work well. My hon. Friends the Members for Brighton, Pavilion (Mr. Lepper) and for Bolton, South-East (Dr. Iddon) have pointed out that the process has illustrated the benefits of scrutiny, and the role that constituency Members, acting in the interests of their constituents, can play in improving legislation and providing safeguards and benefits for them.
	My hon. Friends the Members for Brighton, Pavilion, for Bolton, South-East, for Cleethorpes and for Bolton, North-East (Mr. Crausby) should take credit for what they have done, because, without their representations, many of the changes in the Bill would not have been introduced. My hon. Friend the Member for Brighton, Pavilion mentioned the leaseholders' group in his constituency. Without the representations that that group made, both through him and directly to the Government, several of the safeguards that have been incorporated into the Bill this evening would not have been added. Dry and technical though the Bill may have been, it has nevertheless demonstrated the House working at its best.
	My hon. Friend the Member for Bolton, South-East was right that there are issues to which we will have to return. There is still work to be done, and a number of measures will have to be dealt with by regulation, at which point further refinements and improvements will be made. We will also have to work with the leasehold valuation tribunals and use publicity to translate some of these benefits into action. We will work closely with the tribunals to ensure that people get the benefits of this legislation, and I hope that hon. Members who have brought pressure to bear on the Government to produce real improvements will also bring the same pressure to bear on the tribunals. It is one thing to enact legislation in this place and quite another to see it translated into action. I am sure that if we can translate this—
	It being Ten o'clock, Mr. Speaker put the Question already proposed from the Chair, pursuant to Orders [31 January and 11 March].
	Question agreed to.
	Bill accordingly read the Third time and passed, with amendments.

DELEGATED LEGISLATION

Mr. Speaker: With permission, I will put together motions Nos. 3, 4 and 5.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Constitutional Law

That the draft National Assembly for Wales (Representation of the People) (Amendment) Order 2002, which was laid before this House on 14th February, be approved.

Immigration

That the draft Asylum Support (Repeal) Order 2002, which was laid before this House on 25th February, be approved.

Local Government Finance

That the Local Government Finance (England) Special Grant Report (No.93) (HC 654), on the Neighbourhood Renewal Fund 2002-03, which was laid before this House on 27th February, be approved.—[Mr. Stringer.]
	Question agreed to.

STANDING COMMITTEE ON REGIONAL AFFAIRS

Motion made, and Question put forthwith, pursuant to Standing Order No. 117 (Standing Committee on Regional Affairs),
	That—
	(1) the matter of the progress of the Regional Development Agencies against their objectives, being a matter relating to regional affairs in England, be referred to the Standing Committee on Regional Affairs;
	(2) the Committee meet at Two o'clock on Thursday 21st March at Westminster to consider the matter referred to it under paragraph (1) above; and
	(3) the proceedings at the meeting be brought to a conclusion at half-past Four o'clock.—[Mr. Stringer.]
	Question agreed to.

SPECIALISED HOSPITAL SERVICES (NORTH-WEST LONDON)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stringer.]

John Wilkinson: If I return to a subject on which I addressed the House on the Adjournment before the summer recess in July 2001, a subject on which I have addressed the House during seven previous debates in the past four years—many of them moved by myself—I am genuinely not being personally obsessive. I do so because of the prolonged and agonising sagas that have afflicted Harefield, Mount Vernon and St. Vincent's hospitals, in my constituency. They have caused profound worry to my constituents, and to many thousands of others further afield. There has been the cost of many jobs already, and there will be the cost of many more. Patients in my constituency and for many miles around will be seriously deprived of excellent treatments in hospitals that they have loved and admired.
	In my debate on 14 July 1999 on St. Vincent's hospital, I said that the Government's policy of dissuading health authorities from referring national health service patients to "private" hospitals could be fatal to the survival of the small, primarily orthopaedic, hospital of St. Vincent's, Eastcote, which was not private at all but a non-profit making medical charity run for many years by the religious order of the sisters of St. Vincent de Paul.
	The Government ignored my warnings. The hospital duly closed, although the policy is at last changed. It is too late to save St. Vincent's, but at least NHS patients are now sent to the excellent private hospital, Bishopswood, on the Mount Vernon hospital site. However, Mount Vernon hospital is now at risk, thanks to the extraordinary way in which it has been treated by the management of the NHS and the Government, who should never allow the perpetuation of Soviet-style bureaucratic central planning which characterises the NHS today.
	Soon after the Labour party were returned to power, so-called but frustrated consultation was initiated on the future of the regional burns and plastics unit at Mount Vernon, which the London region wanted to transfer to the new Chelsea and Westminster hospital in inner London.
	After the most ferocious controversy, the proposal, which would have undermined the plastics unit and its complementary and supportive work for the regional cancer centre at Mount Vernon, and would have caused the move away from the hospital of the wonderful reconstruction and functional trust medical research charity, was modified in favour of a move to Northwick Park hospital in Harrow, north-west London. I pointed out that Northwick Park hospital was much too far from Mount Vernon for it properly to support the cancer centre. I said that the premises did not exist at Northwick Park hospital and that Northwick Park was already overstretched owing to its high work load as a general hospital.
	Although some of the staff of Mount Vernon hospital's burns and plastics unit and that of the RAFT might be able to stay in their existing homes and perhaps keep their children in their present schools, it would be harder for the cancer centre at Mount Vernon to be supported. For staff, patients and their families, commuting to Harrow would be less than ideal. Many of the unit's skilled staff would probably leave.
	To date, nothing has actually happened, although the move was due to take place this spring. The uncertainty has been bad for medical morale. Capital investment has been minimal. It has been difficult to maintain operating standards and the throughput of patients in operating procedures. Owing to the lack of investment, the premises are less than ideal. It is also much harder for the RAFT to raise private funds for its vital research.
	I believe that London regions would still like our burns and plastics unit from Mount Vernon to go to Chelsea and Westminster hospital, in inner London. West Hertfordshire health authority, which has a big interest, since many patients come from its area and beyond, owing to Mount Vernon's location only a hundred yards from the Hertfordshire border, will probably not wish the burns and plastics unit to move, and certainly will not want it to move to Chelsea and Westminster hospital.
	NHS eastern region is conducting a review of cancer services at Mount Vernon. It has identified three options that could have been written by a schoolboy on the back of an envelope in a moment of tedium during a dreary class. They are: to develop the existing cancer centre at Mount Vernon, to transfer services to newly developed facilities at an existing general hospital in Hertfordshire—Hemel Hempstead or Watford—and to construct a purpose-built new hospital on a greenfield site, probably south of St Albans.
	On 11 March, an Under-Secretary of State wrote to me:
	"Whichever route is taken, the development of a comprehensive cancer centre will involve the relocation of services from existing hospitals, and for some models the closure of hospitals. An important element of the work has been that the model for the 'ideal' cancer centre in 2010, regardless of location, has been signed up to by the Steering Group and has the support of the National Cancer Director, Professor Mike Richards, as well as clinicians from the cancer centre.
	In the short and medium term (until 2008) work continues between the local trusts and health authorities to ensure that the cancer service on the Mount Vernon site receives support from other services to ensure that high quality care is maintained."
	Does that mean that the burns and plastics unit is to stay at Mount Vernon at least until 2008 to support the cancer centre there, as it should? That is what I, at least, would infer from the letter.
	The trouble with NHS planning is that the best all too easily becomes the enemy of the good. Mrs. Rosie Varley and her review team from eastern region, to her credit and on her initiative, presented a progress report to local MPs at two meetings at the House of Commons in the summer and the autumn of last year. All Members, regardless of party—except one "dissentient" on the second occasion—said that Mount Vernon was the ideal location for their constituents' cancer treatment, and praised the quality of the care that they received there.
	The cancer research institute, known as the Gray laboratory at Mount Vernon, has made eminent submissions in favour of keeping the cancer centre at Mount Vernon—submissions which do not seem to have received the attention they deserve from the review team. I have had to bring them to the attention of the Secretary of State.
	People have become totally cynical about decision making in the NHS. Their experience tells them that decisions are made behind closed doors at a high level in advance, that specialist reviews are designed to build up usually specious arguments to justify those decisions, and that the conclusions are then presented to the public for so-called consultations which are in practice a charade, as they are a dialogue of the deaf with NHS officials who are reluctant to change their predetermined policy.
	That was our experience with the Government's proclaimed intention, which is an official intention, for Harefield hospital, probably the most famous cardiothoracic hospital in Britain, which has done more heart transplants than any in the world. Following a Government diktat, its in-patient services are due to move by 2006 to a new hospital in Paddington, as yet unbuilt. Its out-patient services are due to move to extra facilities, as yet unconstructed, at Watford and Hemel Hempstead hospitals. Rumour has it that land has been set aside beside Hemel Hempstead hospital in hopeful anticipation.
	Those of us who care for Harefield's future—I am glad to see the hon. Member for Hayes and Harlington (John McDonnell) in the Chamber, because he has been a staunch supporter of its work—believe that, despite Her Majesty's Government determination to sell much of the Harefield site for a science park, their policy is expensive and fatally flawed, and will cost infinitely more than enhancement of Harefield's facilities in its excellent location—in fact, well over £100 million more.
	By contrast, Hammersmith hospital's inner London cardiac facilities are to be built up. The cost is modest, as it is building up an existing unit: the cost is £13 million. Harefield, however, which is in outer London and serves a vast catchment area throughout the south of England, is ignored in favour of a new hospital at Paddington in one of the most inaccessible, polluted, congested and overdeveloped parts of inner London—indeed, it is on the edge of the Mayor's motor congestion tax zone.
	It is not surprising that Westminster City council has not granted the necessary planning permission. It believes that there was an excess of proposed retail developments on the intended medical campus. The council is also unimpressed, as is anyone else who knows the situation, by the lack of parking spaces on the proposed site. Families could only easily visit their relatives and park there after staff had gone home in the evening. Paddington basin is to be the single biggest urban development in London since docklands, bringing 30,000 additional jobs to the capital—hardly the oasis of calm and pure air which cardiothoracic patients need in abundance and currently enjoy in full measure at Harefield.
	The heart of the Harefield campaign, under the indomitable leadership of Jean Brett and her many friends and associates, whose efforts I salute, is convinced that, before 2006, Her Majesty's Treasury will realise that the cost-effective solution of building up existing centres for specialist excellence, such as those at Harefield for cardiothoracics and those at Mount Vernon for cancer, burns and plastics, is much better value for money and a wiser investment of public funds than grandiose projects such as the Paddington basin.
	The new cancer centre in Hertfordshire also sounds like a grandiose project, as it is going to be an "ideal" cancer centre, possibly even on a greenfield site, which has not of course been revealed by Hertfordshire county council. No one knows exactly where it is, although notional journey times have been measured to it. From those notional journey times, we secured from the review team the admission that it had picked a site somewhere south of St. Albans.
	The wishes of patients and their families should count in the NHS, but they seem not to do so at present. Even the representations to the Secretary of State of the former chairman of Harefield and Royal Brompton NHS trust, Sir Geoffrey Errington, were ignored. That fine public servant stressed the benefits of complementarity of heart research and treatment on the Harefield site.
	I hope that the Secretary of State will grant Sir Geoffrey the interview that he requested, and which he fully deserves. The trouble is that Kensington, Chelsea and Westminster health authority was the lead health authority in the public consultation, and it had a blatant vested interest as a member of the development partnership for Paddington basin, even before the consultation began. As a consequence, the outcome was predictable. It prejudiced the decision-making process, and it merits much further examination, perhaps in terms of its permissibility under the Human Rights Act 1998. The health authority, like the Government, ignored all petitions, debates and representations.
	In conclusion, the stories of the St. Vincent's, Mount Vernon and Harefield hospitals, as I have recounted them tonight, demonstrate all that is worst in the NHS today. Staff work nobly, often against a background of total uncertainty and inexplicable bureaucratic power-plays. Patients and local residents love their local specialist hospitals, and they are appalled. No notice seems to be taken of their views, and the taxpayer pays more for decisions that cannot be justified logically. It is time to put matters right, and I hope that the Government will do so as far as Harefield and Mount Vernon hospitals are concerned.

Hazel Blears: First, I congratulate the hon. Member for Ruislip-Northwood (Mr. Wilkinson) on securing this debate about the future of specialist hospital services in north-west London. It gives me a chance to set out the work under way in relation to Harefield hospital and the Paddington basin complex.
	The scheme will cost £360 million, and will bring together the NHS and the Imperial college school of medicine in a development that will be a centre for clinical excellence, innovation, teaching and research. It also represents a unique opportunity to establish hospital design at the forefront of a massive urban development.
	Tonight's debate also gives us a chance to discuss the provision of some specialist services in north-west London, as well as the options for change being developed for Mount Vernon hospital cancer services. Although it is inevitable that I shall have to rehearse some of the arguments behind the options being developed in relation to services such as cancer services at Mount Vernon hospital, it is important that I do not prejudge the future consultation. I hope that the hon. Member for Ruislip-Northwood will understand that, given that the proposals are still very much under development and that public consultation has yet to commence, I am not in a position tonight to engage in a detailed debate about some of the matters that will arise out of that consultation process.
	The hon. Gentleman has raised in this House the future of Harefield hospital on many occasions on behalf of his constituents. I think that we all know that, under the inspirational clinical leadership of Professor Sir Magdi Yacoub, Harefield hospital has been remarkably successful in its development of heart and lung services. It has also become a centre where research and development is an integral part of the work to improve life expectancy and the quality of life for those with serious cardiothoracic conditions. I would like to take this opportunity to acknowledge that specialist care of the type that has been pioneered at Harefield will continue to form a crucial part of the overall network of services provided for people with coronary heart disease.
	The Department of Health confirmed last October that it intended to move ahead with plans to develop a new hospital complex at Paddington. That development will bring together three world-class hospitals and include cutting-edge research facilities. The £360 million Paddington basin scheme will offer specialist services for children, with heart and lung patients being concentrated on one site in Paddington. That will bring together the strength of the Royal Brompton, St Mary's and Harefield hospitals. Specialist kidney services, including transplants, will be developed at Hammersmith.
	The Paddington health complex will be a centre for clinical excellence, innovation, teaching and research, and it will form part of a major urban regeneration scheme. We should not underestimate the strength of the project being developed.
	The hon. Gentleman referred to the objections of the community health councils to the proposals. Those have been considered by Ministers, and a full response was given by my right hon. Friend the Minister of State, Department of Health. He was satisfied at that stage that the conditions associated with the decision and the undertakings about further work to be done will address many of the issues raised during the consultation process.
	The hon. Gentleman has expressed concern in the past that the option of investing at Harefield was not given sufficient attention during the consultation process. In fact, I can confirm that the option of a centre at Harefield hospital was included in the consultation. It considered the option of developing an independent specialist centre at Harefield hospital. It acknowledged Harefield hospital's national reputation as well as the strong doubts about the ability of a single specialty hospital to continue in relative isolation. I acknowledge that proposals and decisions of that nature are difficult for local communities. There are tensions involved in bringing together services so that they can provide excellence within a setting of other specialties rather than continuing to develop in a fairly isolated situation. Sometimes those issues are finely balanced and raise tremendous concerns in local communities.
	The argument presented was that Harefield, being several miles from local general hospitals with accident and emergency departments, would not be in a position to draw on support from the wider range of specialties that are found at such hospitals and that the only way to achieve these benefits would be to build a completely new major general hospital on the Harefield site. Such a proposal would seriously threaten the viability of two existing hospitals—Hillingdon and Northwick Park. The options that were shortlisted were considered more robust because, if implemented, they would make use of existing major teaching hospitals rather than requiring the creation of a new one at the expense and probable demise of two other local general hospitals.
	The hon. Gentleman referred to the staff concerns about whether they will be able to transfer to the new complex at the Paddington basin. Staff recruitment and retention, particularly in this part of the country, are challenging matters for the national health service. Every NHS trust has to carry out a survey of all its staff to see how it can improve recruitment and retention, provide flexible working hours and child care facilities and ensure that when we attract the best staff into the NHS, we keep them there.
	I confirm that the trust is developing plans to ensure that all staff will see a career path and options for their future that will mean that they want to continue to play a part in the provision of health services in the area. The new Royal Brompton and Harefield NHS trust will open on the Paddington basin complex in 2007, so we have a lengthy period in which to prepare and ensure that staff receive proper reassurance about their future.
	Staff have raised issues such as help with transport, financial incentives, accommodation, career opportunities and working environment. An action plan for all those issues is being developed by the trust to make sure that measures are in place to address the concerns about accommodation, transport and travel in the area.
	In his response to the community health councils, my right hon. Friend the Minister of State emphasised the importance of drawing a line under any uncertainty or confusion that patients or staff might feel. There is investment in the Harefield site while we are waiting for the development of the Paddington basin. More than £4 million is being put into a patient services centre and £1 million into pathology services on the site.
	We have also made available £2.5 million to the Harefield Research Foundation for the further development of the heart sciences centre on that site. The centre will remain on the hospital site beyond the transfer of clinical services to Paddington. The second phase of the centre is under construction. That presents an opportunity for the development of a science park built on the success of the heart sciences centre. A feasibility study was commissioned last year and a draft report is being assessed. It appears that there is a market for a science park in the area, but further work is required in collaboration with the Imperial College of Science, Technology and Medicine. The two trusts are developing a full business case for the Paddington basin scheme which, as I said, should be completed by 2007. That will safeguard all the excellent research and clinical work that is going on and will provide services that are fit for the 21st century.

Gareth Thomas: On uncertainty, does my hon. Friend realise that there has been considerable concern about the future of specialist services in north-west London ever since the accident and emergency unit at Mount Vernon hospital was shut in 1996? Does she realise that the profound concern expressed by the hon. Member for Ruislip-Northwood (Mr. Wilkinson) about the future of cancer services at Mount Vernon is shared by my constituents? Will she ensure that the consultation process currently under way and the considerations by her Department take into account the concerns of my constituents in Harrow as well as those of the hon. Gentleman?

Hazel Blears: My hon. Friend and the hon. Member for Ruislip-Northwood have referred to the uncertainty of local people. Any period of change and uncertainty in the NHS causes great distress to local people. That is partly because they value their services enormously—that great attachment to the NHS makes us realise how central its services are to local communities. It is vital that patients and the public be fully involved in all the consultation processes. The hon. Gentleman said that the voice of patients and of the public is not heard so we must consult the public creatively and innovatively rather than simply going through a formal process.
	It is important to get to the heart of the concerns of local people. We want to provide modern, 21st-century services of a much higher standard than those that existed previously. It is essential to take the public with us on that journey. My hon. Friend the Member for Harrow, West (Mr. Thomas) made the point extremely well.
	A large number of reviews of Mount Vernon hospital have failed to deliver a long-term solution. It is essential to clarify the long-term future of the whole cancer network so that decisions about medium and long-term investment can be made sensibly.
	The Mount Vernon cancer review started in February 2001 and an interim report was published in September. Feedback has been received on the three options for developing the cancer centre: at Mount Vernon; at a greenfield site; or at an upgraded district general hospital in Hertfordshire. A detailed site survey was conducted at Mount Vernon and the other district general hospitals under consideration to identify their condition and capacity for further development. A further survey of public and car transport has been undertaken. Access to those services is a key issue for local people.

John McDonnell: In our area we almost feel consultatively abused at present—we have been reviewed and consulted so often. The test of any review or consultation is whether anyone is listening. In relation to the latest review, the community is unanimous—across the political spectrum of all the MPs representing the area—in opposing the move. I hope that this time someone will actually listen.

Hazel Blears: My hon. Friend makes an important point. No matter how good the consultation process, the proof of its success is that people not only listen but act on the points made by local communities. In this review, the issues were closely investigated and that will continue—especially as regards people's concerns about access to services. In the past such concerns have not always weighed as heavily as the clinical issues. My hon. Friend is right.

John Randall: The hon. Lady referred to the importance of these services to local communities. Does not she consider that that is one of the paramount reasons for retaining such services in those communities?

Hazel Blears: As I said to the hon. Member for Ruislip-Northwood earlier, decisions about the reconfiguration of services are always beset with tension. We have to try to achieve the right balance between specialisation—to provide an excellent quality of service—and access for people close to their homes.
	We have to listen to all the parties involved to ensure that people have the high quality services that they rightly demand and expect and that those services are accessible to as many local people as possible. That balance is difficult to find but we should not shy away from entering the debate.
	The model being developed for cancer services is the right one. It brings together diagnosis, surgical treatment and oncology and has been widely endorsed in the interim report. I understand the concerns of the hon. Member for Ruislip-Northwood about the future of the cancer centre, and I shall ensure that the consultation is rigorous and takes into account the views of local people in deciding the way forward for those services that are so important to the constituents of all the hon. Members who have spoken this evening.
	Question put and agreed to.
	Adjourned accordingly at half-past Ten o'clock.